Exhibit 4(e)(1)
================================================================================
PARTICIPATION AGREEMENT
(N372DA)
Dated as of April 30, 2002
among
DELTA AIR LINES, INC.,
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Pass Through Trustee under each of the
Pass Through Trust Agreements
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Subordination Agent
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Loan Trustee
and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
in its individual capacity as set forth herein
---------------
One Boeing 737-832 Aircraft
U.S. Registration No. N372DA
================================================================================
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions...................................................
Section 1.02 Other Definitional Provisions.................................
ARTICLE 2
THE LOANS
Section 2.01 The Loans.....................................................
Section 2.02 Issuance of Equipment Notes...................................
Section 2.03 The Closing...................................................
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.01 Conditions Precedent to Obligations of Pass Through
Trustees....................................................
Section 3.02 Conditions Precedent to Obligations of Company................
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF COMPANY
Section 4.01 Representations and Warranties of Company.....................
Section 4.02 General Indemnity.............................................
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF STATE STREET
Section 5.01 Representations, Warranties and Covenants of State Street.....
ARTICLE 6
OTHER COVENANTS AND AGREEMENTS
Section 6.01 Other Agreements..............................................
Section 6.02 Certain Covenants of Company..................................
ARTICLE 7
MISCELLANEOUS
Section 7.01 Notices.......................................................
Section 7.02 Survival of Representations, Warranties, Indemnities,
Covenants and Agreements....................................
Section 7.03 Governing Law.................................................
Section 7.04 Severability..................................................
Section 7.05 No Oral Modifications or Continuing Waivers; Consents.........
Section 7.06 Effect of Headings and Table of Contents......................
Section 7.07 Successors and Assigns........................................
Section 7.08 Benefits of Agreement.........................................
Section 7.09 Counterparts..................................................
Section 7.10 Submission to Jurisdiction....................................
Section 7.11 Sale/Leaseback Transaction....................................
Schedule I - Equipment Notes, Purchasers and Original Principal Amounts
Schedule II - Trust Supplements
Exhibit A-1 - Form of Opinion of Counsel for Company
Exhibit A-2 - Form of Opinion of Cadwalader, Wickersham & Taft, special
counsel for Company
Exhibit A-3 - Form ofss. 1110 Opinion of Cadwalader, Wickersham & Taft,
special counsel for Company
Exhibit B - Form of Opinion of Special Counsel for Loan Trustee,
Subordination Agent and State Street
Exhibit C - Form of Opinion of Special FAA Counsel
Exhibit D-1 - Form of Opinion of Special Counsel for Liquidity Provider
Exhibit D-2 - Form of Opinion of German In-House Counsel for
Liquidity Provider
Exhibit E - Form of Manufacturer's Consent
Exhibit F - Form of Opinion of Special Counsel for Pass Through
Trustees
Exhibit G - Form of Amended and Restated Participation Agreement
Exhibit H - Form of Lease
Exhibit I - Form of Amended and Restated Indenture
Exhibit J - Form of Purchase Agreement Assignment
Exhibit K - Form of Trust Agreement
Exhibit L - Mandatory Document Terms
Exhibit M - Mandatory Economic Terms
Exhibit N - Form of Opinion of Special Counsel for Policy Provider
Annex A - Definitions
PARTICIPATION AGREEMENT
(N372DA)
This PARTICIPATION AGREEMENT (N372DA), dated as of April 30, 2002,
is made by and among DELTA AIR LINES, INC., a Delaware corporation (together
with its successors and permitted assigns, "Company"), STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association (in its individual capacity, together with its successors and
permitted assigns, "State Street"), not in its individual capacity except as
otherwise expressly provided in any of the Operative Documents or the Pass
Through Documents, but solely as trustee (in such capacity together with any
successor or other trustee in such capacity, "Pass Through Trustee") under each
of the Pass Through Trust Agreements (such term and other capitalized terms used
herein without definition being defined as provided in Section 1.01), STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
banking association, as subordination agent and trustee (in such capacity,
together with any successor trustee in such capacity, "Subordination Agent")
under the Intercreditor Agreement, and STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, as loan trustee (in such capacity, together
with any successor trustee in such capacity, "Loan Trustee") under the
Indenture.
W I T N E S S E T H:
WHEREAS, Company is the owner of that certain Boeing Model 737-832
aircraft more particularly described in the Indenture Supplement originally
executed and delivered under the Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Company and Loan Trustee are entering into the Indenture, pursuant to
which, among other things, Company will issue three series of Equipment Notes,
which Equipment Notes are to be secured by a security interest in all right,
title and interest of Company in and to the Aircraft and certain other property
described in the Indenture;
WHEREAS, pursuant to the Basic Pass Through Trust Agreement and each
of the Trust Supplements set forth in Schedule II, concurrently with the
execution and delivery of this Agreement, separate Pass Through Trusts are being
created to facilitate certain of the transactions contemplated hereby,
including, without limitation, the issuance and sale of Pass Through
Certificates;
WHEREAS, pursuant to the Intercreditor Agreement, Subordination
Agent will hold the Equipment Notes on behalf of the Pass Through Trusts;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained, and of other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. For the purposes of this Agreement, 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 Agreement 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 Agreement, unless otherwise
specifically stated.
(c) The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision.
(d) All references in this Agreement to a "government" are to such
government and any instrumentality or agency thereof.
(e) 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".
ARTICLE 2
THE LOANS
Section 2.01 The Loans. Subject to the terms and conditions of this
Agreement and the Indenture, on the Closing Date Pass Through Trustee for each
Pass Through Trust shall make a loan to Company by paying to Company the
aggregate original principal amounts of the Equipment Notes being issued to such
Pass Through Trust as set forth on Schedule I opposite the name of such Pass
Through Trust. Pass Through Trustees, on behalf of the Pass Through Trusts,
shall make such loans to Company no later than 11:00 a.m. (New York City time)
on the Closing Date by transferring such amount in immediately available funds
to Company at its account at Citibank, N.A., 111 Wall Street, New York, New
York, Account No. 40002617, ABA Number 021000089, with the request that the bank
advise Company by telephone at (404) 715-2046 upon transfer of the funds.
Section 2.02 Issuance of Equipment Notes. Upon the occurrence of the
above payments by Pass Through Trustee for each Pass Through Trust to Company,
Company shall issue, pursuant to and in accordance with Article II of the
Indenture, to Subordination Agent as agent and trustee for Pass Through Trustee
for each Pass Through Trust, one or more Equipment Notes of the maturity and
aggregate principal amount and bearing the interest rate set forth in Schedule I
opposite the name of such Pass Through Trust. Each such Equipment Note shall be
duly authenticated by Loan Trustee pursuant to the Indenture, registered in the
name of Subordination Agent and dated the Closing Date and shall be delivered by
Loan Trustee to Subordination Agent.
Section 2.03 The Closing. The closing (the "Closing") of the
transactions contemplated hereby shall take place at the offices of Cadwalader,
Wickersham & Taft, 100 Maiden Lane, New York, New York at 9:30 a.m. (New York
City time) on April 30, 2002, or at such other time or place as the parties
shall agree.
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.01 Conditions Precedent to Obligations of Pass Through
Trustees. The obligation of each Pass Through Trustee to make the loan
contemplated by Article II is subject to the fulfillment (or the waiver by such
Pass Through Trustee) prior to or on the Closing Date of the following
conditions precedent:
(a) Company shall have tendered the Equipment Notes to Loan Trustee
for authentication, and Loan Trustee shall have authenticated such Equipment
Notes and shall have tendered the Equipment Notes to Subordination Agent on
behalf of the applicable Pass Through Trustee in accordance with Section 2.02.
(b) No change shall have occurred after the date of this Agreement
in applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it a violation
of law or governmental regulations for Pass Through Trustees to make the loans
contemplated by Section 2.01 or to acquire the Equipment Notes.
(c) This Agreement and the following documents shall have been duly
authorized, executed and delivered by the respective party or parties thereto
(other than Pass Through Trustees or Loan Trustee), shall be in full force and
effect and executed counterparts (or copies thereof where indicated) thereof
shall have been delivered to each Pass Through Trustee:
(i) the Intercreditor Agreement;
(ii) the Liquidity Facilities;
(iii) the Pass Through Trust Agreements;
(iv) the Indenture and the Indenture Supplement covering the
Aircraft and dated the Closing Date;
(v) the Manufacturer's Consent;
(vi) a copy of the FAA Bill of Sale; and
(vii) a copy of the Warranty Bill of Sale.
(d) A Uniform Commercial Code financing statement or statements
covering the security interest created by the Indenture shall have been executed
and delivered by Company, as debtor, and by Loan Trustee, as secured party, and
such financing statement or statements shall have been duly filed in all places
necessary or desirable within the State of Delaware.
(e) Each Pass Through Trustee shall have received the following:
(i) a certificate dated the Closing Date of the Secretary or an
Assistant Secretary of Company, certifying as to (A) a copy of the
resolutions of the Board of Directors of Company or the executive
committee thereof duly authorizing the transactions contemplated hereby
and the execution, delivery and performance by Company of this Agreement
and the Indenture and each other document required to be executed and
delivered by Company in accordance with the provisions hereof or thereof
and (B) a copy of the certificate of incorporation and by-laws of Company,
as in effect on the Closing Date;
(ii) a certificate or other evidence from the Secretary of State of
the State of Delaware, dated as of a date reasonably near the Closing
Date, as to the due incorporation and good standing of Company in such
state;
(iii) an incumbency certificate of Company as to the person or
persons authorized to execute and deliver this Agreement, the Indenture
and each other document to be executed by Company in connection with the
transactions contemplated hereby and thereby, and the specimen signatures
of such person or persons; and
(iv) one or more certificates of Loan Trustee and Subordination
Agent certifying to the reasonable satisfaction of Pass Through Trustees
as to the due authorization, execution, delivery and performance by Loan
Trustee and Subordination Agent of each of the Operative Documents to
which Loan Trustee or Subordination Agent is or will be a party and any
other documents to be executed by or on behalf of Loan Trustee or
Subordination Agent in connection with the transactions contemplated
hereby or thereby.
(f) On the Closing Date, the following statements shall be correct:
(i) the representations and warranties of Company herein are correct in all
material respects as though made on and as of such date, except to the extent
that such representations and warranties relate solely to an earlier date (in
which case such representations and warranties are correct on and as of such
earlier date) and (ii) no event has occurred and is continuing that constitutes
an Event of Default or an Event of Loss or would constitute an Event of Default
or Event of Loss but for the requirement that notice be given or time elapse or
both.
(g) Each Pass Through Trustee and Loan Trustee shall have received
(i) an opinion addressed to it from the General Counsel or an Associate General
Counsel of Company (or such other internal counsel to Company as shall be
reasonably satisfactory to Pass Through Trustees) substantially in the form set
forth in Exhibit A-1 and (ii) opinions addressed to it from Cadwalader,
Wickersham & Taft substantially in the forms set forth in Exhibits A-2 and A-3.
(h) Each Pass Through Trustee and Loan Trustee shall have received
an opinion addressed to it from Bingham Dana LLP, special counsel for State
Street, Loan Trustee and Subordination Agent, substantially in the form set
forth in Exhibit B.
(i) Each Pass Through Trustee and Loan Trustee shall have received
an opinion addressed to it from Daugherty, Fowler, Peregrin & Haught, A
Professional Corporation, special FAA counsel in Oklahoma City, Oklahoma,
substantially in the form set forth in Exhibit C.
(j) Each Pass Through Trustee and Loan Trustee shall have received a
certificate or certificates signed by the chief financial or accounting officer,
any Senior Vice President, the Treasurer, any Vice President or any Assistant
Treasurer (or any other Responsible Officer) of Company, dated the Closing Date,
certifying as to the correctness of each of the matters stated in Section
3.01(f).
(k) Each Pass Through Trustee shall have received a certificate from
State Street in its individual capacity and as Loan Trustee and Subordination
Agent, as applicable, dated the Closing Date, signed by an authorized officer of
State Street in its individual capacity and as Loan Trustee and Subordination
Agent, as applicable, certifying for each such entity that no Loan Trustee Liens
or Other Party Liens attributable to it, as applicable, exist, and further
certifying as to the correctness of each of the matters stated in Section 5.01.
(l) Each Pass Through Trustee shall have received opinions addressed
to it from Milbank, Tweed, Hadley & McCloy LLP, special counsel for Liquidity
Provider, substantially in the form set forth in Exhibit D-1, and from German
in-house counsel for Liquidity Provider, substantially in the form set forth in
Exhibit D-2.
(m) Loan Trustee shall have received an insurance report of an
independent insurance broker and the related certificates of insurance, each in
form and substance reasonably satisfactory to Loan Trustee, as to the compliance
with the terms of Section 7.06 of the Indenture relating to insurance with
respect to the Aircraft.
(n) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency, nor
shall any order, judgment or decree have been issued or proposed to be issued by
any court or governmental agency at the time of the Closing to set aside,
restrain, enjoin or prevent the completion and consummation of this Agreement or
the transactions contemplated hereby.
(o) Company shall have entered into the Underwriting Agreement, the
Pass Through Certificates shall have been issued and sold pursuant to the
Underwriting Agreement and the Underwriters shall have transferred to Pass
Through Trustees in immediately available funds an amount at least equal to the
aggregate purchase price of the Equipment Notes to be purchased from Company.
(p) Loan Trustee shall have received an executed copy of the
Manufacturer's Consent substantially in the form set forth in Exhibit E.
(q) Each Pass Through Trustee shall have received an opinion from
Latham & Watkins, special counsel to the Policy Provider, substantially in the
form set forth in Exhibit N.
Promptly upon the recording of the Indenture (with the Indenture
Supplement attached) pursuant to the Transportation Code, Company will cause
Daugherty, Fowler, Peregrin & Haught, A Professional Corporation, special FAA
counsel in Oklahoma City, Oklahoma to deliver to Subordination Agent on behalf
of Pass Through Trustees, to Loan Trustee and to Company an opinion as to the
due recording of such instrument and the lack of filing of any intervening
documents with respect to the Aircraft.
Section 3.02 Conditions Precedent to Obligations of Company. The
obligation of Company to issue and sell the Equipment Notes is subject to the
fulfillment (or waiver by Company) prior to or on the Closing Date of the
following conditions precedent:
(a) No change shall have occurred after the date of this Agreement
in applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it a violation
of law or governmental regulations for Company to enter into any transaction
contemplated by the Operative Documents or the Pass Through Trust Agreements.
(b) The documents referred to in Section 3.01(c) shall have been
duly authorized, executed and delivered by the respective party or parties
thereto (other than Company), shall be in full force and effect and executed
counterparts (or copies thereof where indicated) thereof shall have been
delivered to Company, and Company shall have received such documents and
evidence with respect to State Street, Liquidity Provider, Policy Provider, Loan
Trustee, Subordination Agent and each Pass Through Trustee as Company reasonably
requests in order to establish the consummation of the transactions contemplated
by this Agreement, the taking of all corporate and other proceedings in
connection therewith and compliance with the conditions herein set forth.
(c) The Indenture (with the Indenture Supplement covering the
Aircraft attached) shall have been duly filed for recordation (or shall be in
the process of being so duly filed for recordation) with the FAA pursuant to the
Transportation Code.
(d) On the Closing Date, the representations and warranties herein
of State Street, Loan Trustee, Subordination Agent and Pass Through Trustees
shall be correct as though made on and as of such date, except to the extent
that such representations and warranties relate solely to an earlier date (in
which case such representations and warranties shall have been correct on and as
of such earlier date), and, insofar as such representations and warranties
concern State Street, Loan Trustee, Subordination Agent or any Pass Through
Trustee, such party shall have so certified to Company.
(e) Company shall have received each opinion referred to in
Subsections 3.01(h), 3.01(i), 3.01(l) and 3.01(q), each such opinion (other than
3.01(l)) addressed to Company or accompanied by a letter from the counsel
rendering such opinion authorizing Company to rely on such opinion as if it were
addressed to Company, and the certificates referred to in Subsections
3.01(e)(iv) and 3.01(k).
(f) Company shall have received an opinion addressed to it from
Bingham Dana LLP, special counsel for Pass Through Trustees, substantially in
the form set forth in Exhibit F.
(g) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency, nor
shall any order, judgment or decree have been issued or proposed to be issued by
any court or governmental agency at the time of the Closing to set aside,
restrain, enjoin or prevent the completion and consummation of this Agreement or
the transactions contemplated hereby.
(h) Company shall have received a certificate from State Street
dated the Closing Date, signed by an authorized officer of State Street,
certifying for each Pass Through Trustee that no Other Party Liens attributable
to it exist and further certifying as to the correctness of each of the matters
stated in Section 5.01.
(i) Company shall have been paid by Pass Through Trustee for each
Pass Through Trust the aggregate original principal amount of the Equipment
Notes being issued to such Pass Through Trust as set forth on Schedule I
opposite the name of such Pass Through Trust.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF COMPANY
Section 4.01 Representations and Warranties of Company. Company
represents and warrants that:
(a) Company is a corporation duly incorporated and validly existing
in good standing under the laws of the State of Delaware, is a Certificated Air
Carrier, is a Citizen of the United States, has the corporate power and
authority to own its properties or hold them under lease and to enter into and
perform its obligations under the Operative Documents to which it is a party and
is duly qualified to do business as a foreign corporation in good standing in
each other jurisdiction in which the failure to so qualify would have a material
adverse effect on the consolidated financial condition of Company and its
subsidiaries, considered as a whole, and its jurisdiction of organization (as
such term is used in Article 9 of the Uniform Commercial Code as in effect in
the State of Georgia) is Delaware.
(b) The execution, delivery and performance by Company of this
Agreement and the other Operative Documents to which Company is a party have
been duly authorized by all necessary corporate action on the part of Company,
do not require any stockholder approval or approval or consent of any trustee or
holder of any indebtedness or obligations of Company, except such as have been
duly obtained and are in full force and effect, and do not contravene any law,
governmental rule, regulation, judgment or order binding on Company or the
certificate of incorporation or by-laws of Company or contravene or result in a
breach of, or constitute a default under, or result in the creation of any Lien
(other than as permitted under the Indenture) upon the property of Company
under, any material indenture, mortgage, contract or other agreement to which
Company is a party or by which it or any of its properties may be bound or
affected.
(c) Neither the execution and delivery by Company of this Agreement
and the other Operative Documents to which it is a party, nor the consummation
by Company of any of the transactions contemplated hereby or thereby, requires
the authorization, consent or approval of, the giving of notice to, the filing
or registration with or the taking of any other action in respect of, the
Department of Transportation, the FAA or any other federal or state governmental
authority or agency, except for (i) the registration of the Pass Through
Certificates (other than the Class D Pass Through Certificates) under the
Securities Act of 1933, as amended, and under the securities laws of any state
in which the Pass Through Certificates may be offered for sale if the laws of
such state require such action, (ii) the qualification of the Pass Through Trust
Agreements under the Trust Indenture Act of 1939, as amended, (iii) the orders,
permits, waivers, exemptions, authorizations and approvals of the regulatory
authorities having jurisdiction over Company's operation of the Aircraft
required to be obtained on or prior to the Closing Date, which orders, permits,
waivers, exemptions, authorizations and approvals have been duly obtained and
are, or on the Closing Date will be, in full force and effect, (iv) the filings
referred to in Section 4.01(e) and (v) consents, approvals, notices,
registrations and other actions required to be obtained, given, made or taken
only after the date hereof.
(d) This Agreement and each other Operative Document to which
Company is a party have been duly executed and delivered by Company and
constitute the legal, valid and binding obligations of Company enforceable
against Company in accordance with their terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the rights of creditors generally and by general principles of
equity and except, in the case of the Indenture, as limited by applicable laws
that may affect the remedies provided in the Indenture.
(e) Except for (i) the filing for recordation pursuant to the
Transportation Code of the Indenture (with the Indenture Supplement covering the
Aircraft attached) and (ii) with respect to the security interests created by
such documents, the filing of financing statements (and continuation statements
at periodic intervals) under the Uniform Commercial Code of Georgia, no further
filing or recording of any document is necessary under the laws of the United
States or any state thereof as of the Closing Date in order to establish and
perfect the security interest in the Aircraft created under the Indenture in
favor of Loan Trustee as against Company and any third parties in any applicable
jurisdiction in the United States.
(f) Company is not an investment company or a company controlled by
an investment company within the meaning of the Investment Company Act of 1940,
as amended.
(g) As of the Closing Date, (i) Company has good title to the
Aircraft, free and clear of Liens other than Permitted Liens, (ii) the Aircraft
has been duly certificated by the FAA as to type and airworthiness in accordance
with the terms of the Indenture, (iii) the Indenture (with the Indenture
Supplement covering the Aircraft attached) has been duly filed for recordation
(or shall be in the process of being so duly filed for recordation) with the FAA
pursuant to the Transportation Code and (iv) the Aircraft is duly registered
with the FAA in the name of Company.
Section 4.02 General Indemnity. (a) Claims Defined. For the purposes
of this Section 4.02, "Claims" means any and all liabilities, obligations,
losses, damages, penalties, claims, actions, suits, costs or expenses of
whatsoever kind and nature (whether or not on the basis of negligence, strict or
absolute liability or liability in tort) that may be imposed on, incurred by,
suffered by or asserted against an Indemnitee, as defined below, and, except as
otherwise expressly provided in this Section 4.02, includes all reasonable
out-of-pocket costs, disbursements and expenses (including reasonable
out-of-pocket legal fees and expenses) actually incurred by an Indemnitee in
connection therewith or related thereto.
(b) Indemnitee Defined. For the purposes of this Section 4.02,
"Indemnitee" means (i) State Street and Loan Trustee, (ii) so long as it holds
any Equipment Notes as agent and trustee of any Pass Through Trustee,
Subordination Agent, (iii) so long as it is the holder of any Equipment Notes,
each Pass Through Trustee, (iv) Liquidity Provider and Policy Provider and (v)
each of their respective successors and permitted assigns in such capacities,
agents, servants, officers, employees and directors (the respective agents,
servants, officers, employees and directors of each of the foregoing
Indemnitees, as applicable, together with such Indemnitee, being collectively
the "Related Indemnitee Group" of such Indemnitee); provided that such Persons,
to the extent they are not signatories to this Agreement, have expressly agreed
in writing to be bound by the terms of this Section 4.02 prior to, or
concurrently with, the making of a Claim. If any Indemnitee fails to comply with
any duty or obligation under this Section 4.02 with respect to any Claim, such
Indemnitee shall not be entitled to any indemnity with respect to such Claim
under this Section 4.02 to the extent such failure was prejudicial to Company.
No holder of a Pass Through Certificate in its capacity as such holder shall be
an Indemnitee.
(c) Claims Indemnified. Subject to the exclusions stated in
Subsection 4.02(d), Company agrees to indemnify, protect, defend and hold
harmless on an After-Tax Basis each Indemnitee against Claims resulting from or
arising out of the sale, purchase, acceptance, non-acceptance or rejection of
the Aircraft under the Purchase Agreement or the ownership, possession, use,
non-use, substitution, airworthiness, control, maintenance, repair, operation,
registration, re-registration, condition, sale, lease, sublease, storage,
modification, alteration, return, transfer or other disposition of the Aircraft,
the Airframe, any Engine or any Part (including, without limitation, latent or
other defects, whether or not discoverable, and any claim for patent, trademark
or copyright infringement) by Company, any Permitted Lessee or any other Person.
Without limiting the foregoing and subject to, and without duplication of, the
provisions of Section 6.01(a), Company agrees to pay the reasonable ongoing
fees, and the reasonable out-of-pocket costs and expenses actually incurred
(including, without limitation, reasonable attorney's fees and disbursements
actually incurred and, to the extent payable as provided in the Indenture,
reasonable compensation and expenses of Loan Trustee's agents actually
incurred), of Loan Trustee in connection with the transactions contemplated
hereby.
(d) Claims Excluded. The following are excluded from Company's
agreement to indemnify an Indemnitee under this Section 4.02:
(i) any Claim to the extent such Claim is attributable to acts or
events occurring after (x) the Equipment Notes have been paid in full or
(y) the transfer of possession of the Aircraft pursuant to Article IV of
the Indenture except to the extent that such Claim is attributable to acts
occurring in connection with the exercise of remedies pursuant to Section
4.02 of the Indenture following the occurrence and continuance of an Event
of Default;
(ii) any Claim to the extent such Claim is, or is attributable to, a
Tax;
(iii) any Claim to the extent such Claim is attributable to the
negligence or willful misconduct of such Indemnitee or such Indemnitee's
Related Indemnitee Group;
(iv) any Claim to the extent such Claim is attributable to the
noncompliance by such Indemnitee or such Indemnitee's Related Indemnitee
Group with any of the terms of, or any misrepresentation by an Indemnitee
or its Related Indemnitee Group contained in, this Agreement, any other
Operative Document or any Pass Through Document to which such Indemnitee
or any of such Related Indemnitee Group is a party or any agreement
relating hereto or thereto;
(v) any Claim to the extent such Claim constitutes a Permitted Lien
attributable to such Indemnitee;
(vi) any Claim to the extent such Claim is attributable to the
offer, sale, assignment, transfer, participation or other disposition
(whether voluntary or involuntary) by or on behalf of such Indemnitee or
its Related Indemnitee Group (other than during the occurrence and
continuance of an Event of Default provided that any such offer, sale,
assignment, transfer, participation or other disposition during the
occurrence and continuation of an Event of Default shall not be subject to
indemnification unless it is made in accordance with the Indenture and
applicable law) of any Equipment Note or Pass Through Certificate, all or
any part of such Indemnitee's interest in the Operative Documents or the
Pass Through Documents or any interest in the Collateral or any similar
security;
(vii) any Claim to the extent such Claim is attributable to (A) a
failure on the part of Loan Trustee to distribute in accordance with this
Agreement or the Indenture any amounts received and distributable by it
hereunder or thereunder, (B) a failure on the part of Subordination Agent
to distribute in accordance with the Intercreditor Agreement any amounts
received and distributable by it thereunder or (C) a failure on the part
of any Pass Through Trustee to distribute in accordance with the Pass
Through Trust Agreement to which it is a party any amounts received and
distributable by it thereunder;
(viii) any Claim to the extent such Claim is attributable to the
authorization or giving or withholding of any future amendments,
supplements, waivers or consents with respect to any Operative Document or
any Pass Through Document, other than such as have been requested by
Company or that occur as the result of an Event of Default, or such as are
expressly required or contemplated by the provisions of the Operative
Documents or the Pass Through Documents;
(ix) any Claim to the extent such Claim is payable or borne by (a)
Company pursuant to any indemnification, compensation or reimbursement
provision of any other Operative Document or any Pass Through Document or
(b) a Person other than Company pursuant to any provision of any Operative
Document or any Pass Through Document;
(x) any Claim to the extent such Claim is an ordinary and usual
operating or overhead expense or not an out-of-pocket expense actually
incurred;
(xi) any Claim to the extent such Claim is incurred on account of or
asserted as a result of any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code;
(xii) any Claim to the extent such Claim is attributable to one or
more of the other aircraft financed through the offering of Pass Through
Certificates (in the event of doubt, any Claim shall be allocated between
the Aircraft and such other aircraft in the same proportion that the then
outstanding Equipment Notes bear to the then outstanding equipment notes
issued with respect to the other aircraft and held by Pass Through
Trustees); and
(xiii) any Claim by an Indemnitee related to the status of such
Indemnitee as a passenger or shipper on any of Company's aircraft or as a
party to a marketing or promotional or other commercial agreement with
Company.
(e) Insured Claims. In the case of any Claim indemnified by Company
hereunder that is covered by a policy of insurance maintained by Company, each
Indemnitee agrees to cooperate, at Company's expense, with the insurers in the
exercise of their rights to investigate, defend and compromise such Claim.
(f) Claims Procedure. An Indemnitee shall promptly notify Company of
any Claim as to which indemnification is sought. The failure to provide such
prompt notice shall not release Company from any of its obligations to indemnify
hereunder except to the extent that Company is prejudiced by such failure or
Company's indemnification obligations are increased as a result of such failure.
Such Indemnitee shall promptly submit to Company all additional information in
such Indemnitee's possession to substantiate such Claim as Company reasonably
requests. Subject to the rights of Company's insurers, Company may, at its sole
cost and expense, investigate any Claim, and may in its sole discretion defend
or compromise any Claim. At Company's expense, any Indemnitee shall cooperate
with all reasonable requests of Company in connection therewith. Such Indemnitee
shall not enter into a settlement or other compromise with respect to any Claim
without the prior written consent of Company, which consent shall not be
unreasonably withheld or delayed, unless such Indemnitee waives its right to be
indemnified with respect to such Claim. Where Company or its insurers undertake
the defense of an Indemnitee with respect to a Claim, no additional legal fees
or expenses of such Indemnitee in connection with the defense of such Claim
shall be indemnified hereunder unless such fees or expenses were incurred at the
written request of Company or such insurers. Subject to the requirements of any
policy of insurance, an Indemnitee may participate at its own expense in any
judicial proceeding controlled by Company pursuant to the preceding provisions;
provided that such party's participation does not, in the opinion of counsel
appointed by Company or its insurers to conduct such proceedings, interfere with
such control. Such participation shall not constitute a waiver of the
indemnification provided in this Section 4.02. Notwithstanding anything to the
contrary contained herein, Company shall not under any circumstances be liable
for the fees and expenses of more than one counsel for all Indemnitee with
respect to any one Claim.
(g) Subrogation. To the extent that a Claim is in fact paid in full
by Company or its insurer, Company or such insurer (as the case may be) shall,
without any further action, be subrogated to the rights and remedies of the
Indemnitee on whose behalf such Claim was paid with respect to the transaction
or event giving rise to such Claim. Such Indemnitee shall give such further
assurances or agreements and shall cooperate with Company or such insurer, as
the case may be, to permit Company or such insurer to pursue such rights and
remedies, if any, to the extent reasonably requested by Company. So long as no
Event of Default has occurred and is continuing, if an Indemnitee receives any
payment, in whole or in part, from any party other than Company or its insurers
with respect to any Claim paid by Company or its insurers, it shall promptly pay
over to Company the amount received (but not an amount in excess of the amount
Company or any of its insurers has paid in respect of such Claim). Any amount
referred to in the preceding sentence 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
has occurred and is continuing, but shall be paid to and held by Loan Trustee as
security for the obligations of Company under the Operative Documents. If
Company agrees, such amount payable shall be applied against Company's
obligations thereunder when and as they become due and payable. At such time as
such Event of Default is no longer continuing, such amount, to the extent not
previously so applied against Company's obligations, shall be paid to Company.
If any such amount has been so held by Loan Trustee as security for more than 90
days after any such Event of Default has occurred, during which period (i) Loan
Trustee was not limited by operation of law or otherwise from exercising
remedies under the Indenture and (ii) Loan Trustee did not exercise any remedy
available to it under Section 4.02 of the Indenture, then any remaining amount
shall be paid to Company.
(h) No Guaranty. Nothing set forth in this Section 4.02 constitutes
a guarantee by Company that the Aircraft at any time will have any particular
value, useful life or residual value.
(i) Payments; Interest. Any amount payable to any Indemnitee on
account of a Claim shall be paid within 30 days after receipt by Company of a
written demand therefor from such Indemnitee accompanied by a written statement
describing in reasonable detail the Claims that are the subject of and basis for
such indemnity and the computation of the amount payable. Any payments made
pursuant to this Section 4.02 directly to an Indemnitee or to Company, as the
case may be, shall be made in immediately available funds at such bank or to
such account as is specified by the payee in written directions to the payor or,
if no such directions are given, by check of the payor payable to the order of
the payee and mailed to the payee by certified mail, return receipt requested,
postage prepaid to its address referred to in Section 7.01. To the extent
permitted by applicable law, interest at the Past Due Rate shall be paid, on
demand, on any amount or indemnity not paid when due pursuant to this Section
4.02 until the same is paid. Such interest shall be paid in the same manner as
the unpaid amount in respect of which such interest is due.
(j) Tax deduction or credit. If, by reason of any Claim payment made
to or for the account of an Indemnitee by Company pursuant to this Section 4.02,
such Indemnitee subsequently realizes a tax deduction or credit (including
foreign tax credit and any reduction in Taxes) not previously taken into account
in computing such payment, such Indemnitee shall promptly pay to Company, but
only if Company has made all payments then due and owing to such Indemnitee
under the Operative Documents, an amount equal to the sum of (1) the actual
reduction in Taxes realized by such Indemnitee which is attributable to such
deduction or credit, and (2) the actual reduction in Taxes realized by such
Indemnitee as a result of any payment made by such Indemnitee pursuant to this
sentence.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF STATE STREET
Section 5.01 Representations, Warranties and Covenants of State
Street. State Street, generally, and each of Loan Trustee, Subordination Agent
and Pass Through Trustee as it relates to it, represents, warrants and covenants
that:
(a) State Street is a national banking association duly organized
and validly existing in good standing under the laws of the United States, is
eligible to be Loan Trustee under Section 8.01(a) of the Indenture, will
promptly comply with Section 8.01(a) of the Indenture and has full power,
authority and legal right to enter into and perform its obligations under each
of the Operative Documents and the Pass Through Documents to which State Street,
Loan Trustee, Subordination Agent or any Pass Through Trustee is a party and, in
its capacity as Loan Trustee and Pass Through Trustee, respectively, to
authenticate the Equipment Notes and the Pass Through Certificates,
respectively. State Street is qualified to act as Loan Trustee under Section
8.01(c) of the Indenture.
(b) The execution, delivery and performance by State Street,
individually or in its capacity as Loan Trustee, Subordination Agent or Pass
Through Trustee, as the case may be, of this Agreement, each of the other
Operative Documents and each of the Pass Through Documents to which State
Street, Loan Trustee, Subordination Agent or any Pass Through Trustee is a
party, and the authentication of the Equipment Notes and the Pass Through
Certificates, respectively, to be delivered on the Closing Date, have been duly
authorized by all necessary action on the part of State Street, Loan Trustee,
Subordination Agent and each Pass Through Trustee, as the case may be, and do
not violate any law or regulation of the United States or of the state of the
United States in which State Street is located and which governs the banking and
trust powers of State Street or any order, writ, judgment or decree of any
court, arbitrator or governmental authority applicable to State Street, Loan
Trustee, Subordination Agent or any Pass Through Trustee or any of their assets,
will not violate any provision of the articles of association or by-laws of
State Street and will not violate any provision of, or constitute a default
under, any mortgage, indenture, contract, agreement or undertaking to which any
of State Street, Loan Trustee, Subordination Agent or any Pass Through Trustee
is a party or by which any of them or their respective properties may be bound
or affected.
(c) Neither the execution and delivery by State Street, individually
or in its capacity as Loan Trustee, Subordination Agent or Pass Through Trustee,
as the case may be, of this Agreement, any other Operative Document or any Pass
Through Document to which State Street, Loan Trustee, Subordination Agent or any
Pass Through Trustee is a party, nor the consummation by State Street, Loan
Trustee, Subordination Agent or any Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the authorization, consent
or approval of, the giving of notice to, the filing or registration with, or the
taking of any other action in respect of, any governmental authority or agency
of the United States or the state of the United States where State Street is
located and regulating the banking and trust powers of State Street.
(d) This Agreement, each other Operative Document and each Pass
Through Document to which State Street, Loan Trustee, Subordination Agent or any
Pass Through Trustee is a party have been duly executed and delivered by State
Street, individually and in its capacity as Loan Trustee, Subordination Agent or
Pass Through Trustee, as the case may be, and constitute the legal, valid and
binding obligations of State Street, Loan Trustee, Subordination Agent and such
Pass Through Trustee, as the case may be, enforceable against it in accordance
with its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity.
(e) It unconditionally agrees with and for the benefit of the
parties to this Agreement that it will not directly or indirectly create, incur,
assume or suffer to exist any Loan Trustee Lien or Other Party Lien attributable
to it, and it agrees that it will, at its own cost and expense, promptly take
such action as may be necessary to discharge and satisfy in full any such Lien;
and it shall indemnify, protect, defend and hold harmless each Indemnitee and
Company against Claims in any way resulting from or arising out of a breach by
it of its obligations under this Section 5.01(e).
(f) The Equipment Notes to be issued to Subordination Agent pursuant
hereto are being acquired by it to be held under the Intercreditor Agreement.
(g) Each of State Street, Loan Trustee, Subordination Agent and each
Pass Through Trustee agrees that it will not impose any lifting charge, cable
charge, remittance charge or any other charge or fee on any transfer by Company
of funds to, through or by State Street, Loan Trustee, Subordination Agent or
such Pass Through Trustee pursuant to this Agreement, any other Operative
Document or any Pass Through Document, except as may be otherwise agreed to in
writing by Company.
(h) Each of State Street, Loan Trustee, Subordination Agent and any
Pass Through Trustee agrees to be bound by the terms of Section 10.16 of the
Indenture.
(i) There are no Taxes payable by State Street, Loan Trustee,
Subordination Agent or any Pass Through Trustee imposed by the State of
Connecticut or any political subdivision or taxing authority thereof in
connection with the execution, delivery or performance by State Street, Loan
Trustee, Subordination Agent or any Pass Through Trustee of any Operative
Document or any Pass Through Document (other than franchise or other taxes based
on or measured by any fees or compensation received by any such Person for
services rendered in connection with the transactions contemplated by the
Operative Documents or the Pass Through Documents), and there are no Taxes
payable by any Pass Through Trustee imposed by the State of Connecticut or any
political subdivision thereof in connection with the acquisition, possession or
ownership by such Pass Through Trustee of any of the Equipment Notes (other than
franchise or other taxes based on or measured by any fees or compensation
received by such Pass Through Trustee for services rendered in connection with
the transactions contemplated by the Operative Documents or the Pass Through
Documents) and, assuming that the Pass Through Trusts will not be taxable for
Federal income tax purposes as corporations, but, rather, will be characterized
for such purposes as grantor trusts or partnerships, the Pass Through Trusts
will not be subject to any Taxes imposed by the State of Connecticut or any
political subdivision thereof.
(j) Except with the consent of Company, which shall not be
unreasonably withheld, State Street will act as Pass Through Trustee solely
through its offices within the State of Connecticut, except for such services
that may be performed for it by various agents, but not directly by it, in other
states.
(k) There are no pending or, to its knowledge, threatened actions or
proceedings against State Street, Loan Trustee, Subordination Agent or any Pass
Through Trustee before any court or administrative agency which individually or
in the aggregate, if determined adversely to it, would materially adversely
affect the ability of State Street, Loan Trustee, Subordination Agent or any
Pass Through Trustee to perform its obligations under any Operative Document or
any Pass Through Document.
(l) The representations and warranties contained in Section 7.15 of
each Pass Through Trust Agreement are true, complete and correct as of the
Closing Date.
ARTICLE 6
OTHER COVENANTS AND AGREEMENTS
Section 6.01 Other Agreements. (a) Company agrees promptly to pay
(without duplication of any other obligation Company may have to pay such
amounts) (A) the initial and annual fees and (to the extent Loan Trustee is
entitled to be reimbursed for its reasonable expenses) the reasonable expenses
of Loan Trustee in connection with the transactions contemplated hereby and (B)
the following expenses incurred by Loan Trustee, Subordination Agent and Pass
Through Trustees in connection with the negotiation, preparation, execution and
delivery of this Agreement, the other Operative Documents and the other
documents or instruments referred to herein or therein:
(i) the reasonable fees, expenses and disbursements of (x) Bingham
Dana LLP, special counsel for Loan Trustee, Subordination Agent and Pass
Through Trustees and (y) Daugherty, Fowler, Peregrin & Haught, A
Professional Corporation, special FAA counsel in Oklahoma City, Oklahoma,
in each case to the extent actually incurred; and
(ii) all reasonable expenses incurred in connection with printing
and document production or reproduction expenses, and in connection with
the filing of Uniform Commercial Code financing statements.
(b) Loan Trustee, Noteholders, Subordination Agent and each Pass
Through Trustee agree to execute and deliver, at Company's expense, all such
documents as Company reasonably requests for the purpose of continuing the
registration of the Aircraft at the FAA in Company's name. In addition, each of
Loan Trustee, Subordination Agent, each Pass Through Trustee and any other
Noteholder agrees, for the benefit of Company, to cooperate with Company in
effecting any foreign registration of the Aircraft pursuant to Section 7.02(e)
of the Indenture; provided that prior to any such change in the country of
registry of the Aircraft the conditions set forth in Section 7.02(e) of the
Indenture are met to the reasonable satisfaction of, or waived by, Loan Trustee.
(c) Each of State Street, Loan Trustee, Subordination Agent, each
Pass Through Trustee and any other Noteholder agrees that, unless an Event of
Default shall have occurred and be continuing, it shall not take any action
contrary to, or otherwise in any way interfere with or disturb (and then only in
accordance with the Indenture), the quiet enjoyment of the use and possession of
the Aircraft, the Airframe, any Engine or any Part by Company or any transferee
of any interest in any thereof permitted under the Indenture.
(d) Each Noteholder, including, without limitation, Subordination
Agent and each Pass Through Trustee, unconditionally agrees with and for the
benefit of the parties to this Agreement that it will not directly or indirectly
create, incur, assume or suffer to exist any Noteholder Liens, and such
Noteholder agrees that it will, at its own cost and expense, promptly take such
action as may be necessary to discharge and satisfy in full any such Noteholder
Lien; and each Noteholder hereby agrees to indemnify, protect, defend and hold
harmless each Indemnitee and Company against Claims in any way resulting from or
arising out of a breach by it of its obligations under this Section 6.01(d).
(e) By its acceptance of its Equipment Notes, each Noteholder (i)
unconditionally agrees for the benefit of Company and Loan Trustee to be bound
by and to perform and comply with all of the terms of such Equipment Notes, the
Indenture and this Agreement applicable to such Noteholder and (ii) agrees that
it will not transfer any Equipment Note (or any part thereof) to any entity
unless such entity makes (or is deemed to have made) a representation and
warranty as of the date of transfer that either no part of the funds to be used
by it for the purchase and holding of such Equipment Note (or any part thereof)
constitutes assets of any "employee benefit plan" or that such purchase and
holding will not result in a non-exempt prohibited transaction under Section
4975 of the Code and Section 406 of ERISA.
(f) Each of Company, Loan Trustee, each Pass Through Trustee and
Subordination Agent covenants that (i) until one year and one day after the
Series G-1 Equipment Notes have been paid in full, it shall not acquiesce,
petition or otherwise invoke or cause or join in invoking or causing the Class
G-1 Pass Through Trust or any other Person to invoke the process of any
governmental authority for the purpose of commencing or sustaining a case
(whether voluntary or not) against the Class G-1 Pass Through Trust under any
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Class G-1 Pass Through Trust or any substantial part of its property or ordering
the winding-up or liquidation of the affairs of the Class G-1 Pass Through
Trust, (ii) until one year and one day after the Series G-2 Equipment Notes have
been paid in full, it shall not acquiesce, petition or otherwise invoke or cause
or join in invoking or causing the Class G-2 Pass Through Trust or any other
Person to invoke the process of any governmental authority for the purpose of
commencing or sustaining a case (whether voluntary or not) against the Class G-2
Pass Through Trust under any bankruptcy, insolvency or similar law or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Class G-2 Pass Through Trust or any substantial part of
its property or ordering the winding-up or liquidation of the affairs of the
Class G-2 Pass Through Trust, and (iii) until one year and one day after the
Series C Equipment Notes have been paid in full, it shall not acquiesce,
petition or otherwise invoke or cause or join in invoking or causing the Class C
Pass Through Trust or any other Person to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case (whether voluntary
or not) against the Class C Pass Through Trust under any bankruptcy, insolvency
or similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Class C Pass Through
Trust or any substantial part of its property or ordering the winding-up or
liquidation of the affairs of the Class C Pass Through Trust.
Section 6.02 Certain Covenants of Company. Company covenants and
agrees with Loan Trustee as follows:
(a) On and after the Closing, Company will cause to be done,
executed, acknowledged and delivered such further acts, conveyances and
assurances as Loan Trustee reasonably requests for accomplishing the purposes of
this Agreement and the other Operative Documents; 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.
(b) Company will cause the Indenture (with the Indenture Supplement
covering the Aircraft attached) to be promptly filed and recorded, or filed for
recording, with the FAA to the extent permitted under the Transportation Code
and the rules and regulations of the FAA thereunder.
(c) Company, at its expense, will take, or cause to be taken, such
action with respect to the recording, filing, re-recording and refiling of the
Indenture and any financing statements or other instruments as are necessary to
maintain, so long as the Indenture is in effect, the perfection of the security
interests created by the Indenture or will furnish Loan Trustee timely notice of
the necessity of such action, together with such instruments, in execution form,
and such other information as may be required to enable Loan Trustee to take
such action. In addition, Company will pay any and all recording, stamp and
other similar taxes payable in the United States, and in any other jurisdiction
where the Aircraft is registered, in connection with the execution, delivery,
recording, filing, re-recording and refiling of the Indenture or any such
financing statements or other instruments. Company will notify Loan Trustee of
any change in its jurisdiction of organization (as such term is used in Article
9 of the Uniform Commercial Code as in effect in the State of Delaware) promptly
after making such change or in any event within the period of time necessary
under applicable law to prevent the lapse of perfection (absent refiling) of
financing statements filed under the Operative Documents.
(d) Company shall at all times maintain its corporate existence
except as permitted by Subsection 6.02(e).
(e) Company shall not consolidate with or merge into any other
Person or convey, transfer or lease substantially all of its assets as an
entirety to any Person, unless:
(i) the successor or transferee entity shall, if and to the extent
required under Section 1110 in order that Loan Trustee continues to be
entitled to any benefits of Section 1110 with respect to the Aircraft, be
a Citizen of the United States and a Certificated Air Carrier and shall
execute and deliver to Loan Trustee an agreement containing the express
assumption by such successor or transferee entity of the due and punctual
performance and observance of each covenant and condition of the Operative
Documents to which Company is a party to be performed or observed by
Company;
(ii) immediately after giving effect to such transaction, no Event
of Default shall have occurred and be continuing; and
(iii) Company shall deliver to Loan Trustee a certificate signed by
a Responsible Officer of Company, and an opinion of counsel (which may be
internal counsel to Company), each stating that such consolidation,
merger, conveyance, transfer or lease and the assumption agreement
mentioned in clause (i) above comply with this Subsection 6.02(e) and that
all conditions precedent herein relating to such transaction have been
complied with (except that such opinion need not cover the matters
referred to in clause (ii) above and may rely, as to factual matters, on a
certificate of an officer of Company) and, in the case of such opinion,
that such assumption agreement has been duly authorized, executed and
delivered by such successor Person and is enforceable against such
successor Person in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and by general
principles of equity.
Upon any consolidation or merger, or any conveyance, transfer or
lease of substantially all of the assets of Company as an entirety in accordance
with this Subsection 6.02(e), the successor Person formed by such consolidation
or into which Company is merged or to which such conveyance, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every right
and power of, Company under this Agreement and the other Operative Documents
with the same effect as if such successor Person had been named as Company
herein.
(f) Company shall remain a Certificated Air Carrier for as long as
and to the extent required under Section 1110 in order that Loan Trustee shall
be entitled to any of the benefits of Section 1110 with respect to the Aircraft.
ARTICLE 7
MISCELLANEOUS
Section 7.01 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices required or permitted under the terms
and provisions of this Agreement shall be in English and in writing, and any
such notice may be given by registered or certified United States mail, courier
service or facsimile or any other customary means of communication, 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:
if to Company, addressed to:
Delta Air Lines, Inc.
1030 Delta Boulevard
Atlanta, Georgia 30320
Attention: Treasurer, Dept. 856
Telephone: (404) 714-1724
Facsimile: (404) 715-4862
with a copy to the General Counsel at the same address, but Dept. 971
Telephone: (404) 715-2387
Facsimile: (404) 733-1657
if to State Street, Loan Trustee, Subordination Agent or any Pass Through
Trustee, addressed to:
State Street Bank And Trust Company of Connecticut,
National Association
225 Asylum Street
Goodwin Square
Hartford, Connecticut 06103
Attention: Corporate Trust Division
Telephone: (860) 244-1844
Facsimile: (860) 244-1881
or if to any subsequent Noteholder, addressed to such Noteholder at its address
set forth in the Equipment Note Register maintained pursuant to Section 2.07 of
the Indenture.
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 7.01.
Section 7.02 Survival of Representations, Warranties, Indemnities,
Covenants and Agreements. Except as otherwise provided herein, the
representations, warranties, indemnities, covenants and agreements of Company,
State Street, Loan Trustee, Subordination Agent, each Pass Through Trustee and
Noteholders herein, and each of their obligations hereunder, shall survive the
making of the loans and the expiration or termination (to the extent arising out
of acts or events occurring prior to such expiration) of any Operative
Documents.
Section 7.03 Governing Law. THIS AGREEMENT 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.
Section 7.04 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 7.05 No Oral Modifications or Continuing Waivers; Consents.
Subject to Section 9.03 of the Indenture, no terms or provisions of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which the enforcement of
the change, waiver, discharge or termination is sought. No such change, waiver,
discharge or termination shall be effective unless a signed copy thereof is
delivered to Loan Trustee. Each Pass Through Trustee and, by its acceptance of
an Equipment Note, each subsequent Noteholder covenants and agrees that it shall
not unreasonably withhold its consent to any consent of Loan Trustee requested
by Company under the Indenture.
Section 7.06 Effect of Headings and Table of Contents. The headings
of the various Articles and Sections herein and in the Table of Contents are for
convenience of reference only and do not define or limit any of the terms or
provisions hereof.
Section 7.07 Successors and Assigns. All covenants, agreements,
representations and warranties in this Agreement by Company, by State Street,
individually or as Loan Trustee, Subordination Agent or Pass Through Trustee, or
by any Noteholder, shall bind and inure to the benefit of and be enforceable by
Company, and subject to the terms of Section 6.02(e), its successors and
permitted assigns, each Pass Through Trustee and any successor or other trustee
under the Pass Through Trust Agreement to which it is a party, Subordination
Agent and its successor under the Intercreditor Agreement and Loan Trustee and
its successor under the Indenture, whether so expressed or not.
Section 7.08 Benefits of Agreement. Nothing in this Agreement,
express or implied, gives to any Person, other than the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement, except as expressly provided herein. Company agrees
and acknowledges that Liquidity Provider and Policy Provider shall be third
party beneficiaries of the covenants and agreements of Company with respect to
the Mandatory Documents Terms and the Mandatory Economic Terms and the
indemnities contained in Section 4.02 and may rely on the covenants and
agreements of Company with respect to the Mandatory Documents Terms and the
Mandatory Economic Terms and such indemnities to the same extent as if the
covenants and agreements of Company with respect to the Mandatory Documents
Terms and the Mandatory Economic Terms and such indemnities were made to
Liquidity Provider and Policy Provider directly.
Section 7.09 Counterparts. This Agreement may be executed in any
number of counterparts. Each of the parties hereto shall not be required to
execute the same counterpart. Each counterpart of this Agreement including a
signature page or pages executed by each of the parties hereto shall be an
original counterpart of this Agreement, but all of such counterparts shall
together constitute one instrument.
Section 7.10 Submission to Jurisdiction. Each of the parties hereto,
to the extent it may do so under applicable law, for purposes hereof and of all
other Operative Documents 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 Agreement, the subject
matter hereof or any of the transactions contemplated hereby brought by any
party or parties hereto, 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 Agreement or the subject matter hereof or
any of the transactions contemplated hereby may not be enforced in or by such
courts.
Section 7.11 Sale/Leaseback Transaction. Notwithstanding anything to
the contrary contained herein or in any other Operative Document, so long as no
Event of Default (or an event or condition that, with the passage of time or
notice, or both, would constitute an Event of Default) has occurred and is
continuing, upon not less than five days' prior written notice to the parties
hereto, Company shall have the right to sell the Aircraft and transfer title to
the Aircraft to an owner trustee for the benefit of an owner participant (which
shall be a "Transferee" (as defined in the Participation Agreement Form)) in a
transaction in which such owner trustee assumes all of the obligations of
Company under the Equipment Notes and the Indenture on a non-recourse basis
(with Company being released from such obligations, except to the extent accrued
prior thereto), leases the Aircraft to Company and assigns such lease to Loan
Trustee pursuant to an amended and restated indenture (a "Sale/Leaseback
Transaction"). In connection with such Sale/Leaseback Transaction, each of the
parties hereto and each Noteholder will execute and deliver appropriate
documentation permitting the owner trustee to assume the obligations of Company
under the Equipment Notes and the Indenture on a non-recourse basis, releasing
Company from all obligations in respect of the Equipment Notes and the Indenture
(except to the extent accrued prior thereto), and take all other actions as are
reasonably necessary to permit such assumption by the owner trustee. In
connection with any such Sale/Leaseback Transaction, the parties agree that (a)
the documents to be utilized shall be (i) an amended and restated participation
agreement (N372DA) amending and restating this Agreement, such amended and
restated participation agreement to be substantially in the Participation
Agreement Form, among the parties hereto, any Noteholder which is not a party
hereto, the owner trustee and the owner participant, with such changes as do not
vary the Mandatory Economic Terms or the Mandatory Document Terms (except as
such Mandatory Document Terms may be modified in accordance with Exhibit L),
(ii) a lease agreement (N372DA), such lease agreement to be substantially in the
Lease Form, between the owner trustee and Company with such changes to such form
as do not vary the Mandatory Economic Terms or the Mandatory Document Terms
(except as such Mandatory Document Terms may be modified in accordance with
Exhibit L), (iii) an amended and restated indenture (N372DA) amending and
restating the Indenture, such amended and restated indenture to be substantially
in the Indenture Form, with such changes to such form as do not vary the
Mandatory Economic Terms or the Mandatory Document Terms (except as such
Mandatory Document Terms may be modified in accordance with Exhibit L), (iv) a
purchase agreement assignment (N372DA), such purchase agreement assignment to be
substantially in the form of Exhibit J between Company and the owner trustee
with such changes to such form as do not vary the Mandatory Economic Terms or
the Mandatory Document Terms (except as such Mandatory Document Terms may be
modified in accordance with Exhibit L) and (v) a trust agreement (N372DA), such
trust agreement to be substantially in the form of Exhibit K between the owner
trustee and the owner participant with such changes to such form as do not vary
the Mandatory Economic Terms or the Mandatory Document Terms (except as such
Mandatory Document Terms may be modified in accordance with Exhibit L hereto),
(b) Company shall deliver a certificate to each Pass Through Trustee, Liquidity
Provider and Policy Provider stating that (i) such amended and restated
participation agreement and such other agreements described in subclauses (ii)
through (v) of the preceding clause (a) do not vary the Mandatory Economic Terms
and contain the Mandatory Document Terms (except as such Mandatory Document
Terms may be modified in accordance with Exhibit L hereto) and (ii) any
modification of such agreements described in subclauses (i) through (v) of the
preceding clause (a) from the forms thereof attached to this Agreement do not
materially and adversely affect Liquidity Provider, Policy Provider or the
holders of the Pass Through Certificates, and such certification shall be true
and correct and (c) the Equipment Notes shall be delivered to Loan Trustee for
cancellation in exchange for new equipment notes to be issued to Noteholders by
the owner trustee, such new equipment notes to be substantially in the form
contained in Section 2.01 of the form of amended and restated indenture attached
hereto as Exhibit I. Such new equipment notes will have the same payment terms
as the Equipment Notes except that in the event that Company enters into a
Sale/Leaseback Transaction prior to May 1, 2003, Company shall have the right to
reoptimize the new equipment notes (by changing the maturity date and/or the
principal payment requirements thereof) to be issued to Noteholders by the owner
trustee in compliance with the Mandatory Economic Terms. The parties agree that
if, in connection with the entering into of a Sale/Leaseback Transaction, any
owner participant who is to be party to any of the agreements described in
subclauses (i) through (v) of clause (a) of the second preceding sentence shall
not be a Citizen of the United States, then the agreements described in
subclauses (i) through (v) of clause (a) of the second preceding sentence shall
be modified, consistent with the Mandatory Document Terms (as such Mandatory
Document Terms may be modified in accordance with Exhibit L), to require such
owner participant to enter into a voting trust, voting powers or similar
arrangement satisfactory to Company that (A) enables the Aircraft to be
registered in the United States and (B) complies with the FAA regulations issued
under the Transportation Code applicable thereto. Notwithstanding the foregoing,
Company shall not have the right to enter into a Sale/Leaseback Transaction
unless (a) Company causes to be delivered to Loan Trustee an opinion of counsel
to the effect that holders of Pass Through Certificates will not recognize
income, gain or loss for federal income tax purposes as a result of such
assumption and release and will be subject to federal income tax in the same
amounts, in the same manner and at the same time as would have been the case if
such assumption and release had not occurred (other than such change in amount,
manner and timing of interest that results from any reoptimization of new
equipment notes permitted pursuant to this Section 7.11) and that the Pass
Through Trusts will not be subject to federal income taxation as a result of
such assumption and release and (b) written confirmation from each Rating Agency
that the Sale/Leaseback Transaction and/or reoptimization of the new equipment
notes in connection therewith will not result in a withdrawal, suspension or
downgrading of the ratings of any class of Pass Through Certificates (without
regard to the Policy (as defined in the Policy Provider Agreement)).
IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be duly executed by their respective officers
thereunto duly authorized as of the date first above written.
DELTA AIR LINES, INC.
By:____________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, as
Pass Through Trustee under each of the
Pass Through Trust Agreements
By:____________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
as Subordination Agent
By:____________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
as Loan Trustee
By:____________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
in its individual capacity as set
forth herein
By:____________________________________
Name:
Title:
SCHEDULE I to
PARTICIPATION AGREEMENT
EQUIPMENT NOTES,
PURCHASERS AND ORIGINAL PRINCIPAL AMOUNTS
Description of Original Principal
Purchaser Equipment Notes Maturity Interest Rate Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Delta Air Lines Pass Through Series 2002-1G-1 January 2, 2022 6.718% $19,985,061.21
Trust 2002-1G-1 Equipment Note
EN-1G1-001
Delta Air Lines Pass Through Series 2002-1G-2 July 2, 2012 6.417% $1,073,800.00
Trust 2002-1G-2 Equipment Note
EN-1G2-001
Delta Air Lines Pass Through Series 2002-1C January 2, 2011 7.779% $4,602,000.00
Trust 2002-1C Equipment Note
EN-1C-001
SCHEDULE II to
PARTICIPATION AGREEMENT
TRUST SUPPLEMENTS
Trust Supplement No. 2002-1G-1, dated as of April 30, 2002,
between Company and Pass Through Trustee in respect of Delta Air Lines Pass
Through Trust 2002-1G-1.
Trust Supplement No. 2002-1G-2, dated as of April 30, 2002,
between Company and Pass Through Trustee in respect of Delta Air Lines Pass
Through Trust 2002-1G-2.
Trust Supplement No. 2002-1C, dated as of April 30, 2002, between
Company and Pass Through Trustee in respect of Delta Air Lines Pass Through
Trust 2002-1C.
EXHIBIT A-1 to
PARTICIPATION AGREEMENT
FORM OF OPINION OF
COUNSEL FOR COMPANY
[Intentionally Omitted]
EXHIBIT A-2 to
PARTICIPATION AGREEMENT
FORM OF OPINION OF
SPECIAL COUNSEL FOR COMPANY
[Intentionally Omitted]
EXHIBIT A-3 to
PARTICIPATION AGREEMENT
FORM OF ss. 1110 OPINION OF
SPECIAL COUNSEL FOR COMPANY
[Intentionally Omitted]
EXHIBIT B to
PARTICIPATION AGREEMENT
FORM OF OPINION OF
SPECIAL COUNSEL FOR LOAN TRUSTEE,
SUBORDINATION AGENT AND STATE STREET
[Intentionally Omitted]
EXHIBIT C to
PARTICIPATION AGREEMENT
FORM OF OPINION OF
SPECIAL FAA COUNSEL
[Intentionally Omitted]
EXHIBIT D-1to
PARTICIPATION AGREEMENT
FORM OF OPINION OF SPECIAL
COUNSEL FOR LIQUIDITY PROVIDER
[Intentionally Omitted]
EXHIBIT D-2 to
PARTICIPATION AGREEMENT
FORM OF OPINION OF GERMAN IN-HOUSE
COUNSEL FOR LIQUIDITY PROVIDER
[Intentionally Omitted]
EXHIBIT E to
PARTICIPATION AGREEMENT
FORM OF MANUFACTURER'S CONSENT
[Intentionally Omitted]
EXHIBIT F TO
PARTICIPATION AGREEMENT
FORM OF OPINION OF
SPECIAL COUNSEL FOR PASS THROUGH TRUSTEES
[Intentionally Omitted]
EXHIBIT G TO
PARTICIPATION AGREEMENT
FORM OF AMENDED AND RESTATED
PARTICIPATION AGREEMENT
================================================================================
AMENDED AND RESTATED PARTICIPATION AGREEMENT
(N[_____])
Dated as of _____ __, 200_
among
DELTA AIR LINES, INC.,
as Lessee
[____________________],
as Owner Participant
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Pass Through Trustee under each of the
Pass Through Trust Agreements
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
not in its Individual Capacity, except as
expressly provided herein,
but solely as Owner Trustee
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Subordination Agent
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Loan Trustee
and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
in its individual capacity as set forth herein
---------------
One Boeing 737-832 Aircraft
U.S. Registration No. N[_____]
================================================================================
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions...................................................
Section 1.02 Other Definitional Provisions.................................
ARTICLE 2
PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT
Section 2.01 Participation by Pass Through Trustee.........................
Section 2.02 Participation by Owner Participant............................
Section 2.03 General Provisions............................................
Section 2.04 The Closing...................................................
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.01 Conditions Precedent to the Participations in the Aircraft....
Section 3.02 Conditions Precedent to Obligations of Lessee.................
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF LESSEE
Section 4.01 Representations and Warranties of Lessee......................
Section 4.02 General Tax Indemnity.........................................
Section 4.03 General Indemnity.............................................
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF OTHER PARTIES
Section 5.01 Representations, Warranties and Covenants of State Street.....
Section 5.02 Representations, Warranties and Covenants of Owner
Participant..................................................
Section 5.03 Representations, Warranties and Covenants of Owner Trustee....
Section 5.04 Representations, Warranties and Covenants of Noteholders......
ARTICLE 6
OTHER COVENANTS AND AGREEMENTS
Section 6.01 Other Agreements..............................................
Section 6.02 Certain Covenants of Lessee...................................
ARTICLE 7
OWNER FOR TAX PURPOSES
Section 7.01 Owner for Federal Tax Purposes................................
ARTICLE 8
SITUS OF THE OWNER TRUST
Section 8.01 Change of Situs of Owner Trust................................
ARTICLE 9
INSTRUCTIONS TO OWNER TRUSTEE
Section 9.01 Instructions to Owner Trustee.................................
ARTICLE 10
INTEREST OF NOTEHOLDERS
Section 10.01 Extent of Interest of Noteholders.............................
ARTICLE 11
EXCESS AMOUNT
Section 11.01 Excess Amount.................................................
ARTICLE 12
TRANSACTION EXPENSES
Section 12.01 Invoices and Payment..........................................
Section 12.02 Payment of Other Expenses.....................................
ARTICLE 13
REFINANCINGS
Section 13.01 Refinancings..................................................
ARTICLE 14
RELEASE OF COLLATERAL
Section 14.01 Release of Collateral, Assumption and Release.................
ARTICLE 15
DELIVERY DATE INTEREST PAYMENT
Section 15.01 Delivery Date Interest Payment................................
ARTICLE 16
MISCELLANEOUS
Section 16.01 Notices.......................................................
Section 16.02 Survival of Representations, Warranties, Indemnities,
Covenants and Agreements.....................................
Section 16.03 Governing Law.................................................
Section 16.04 Severability..................................................
Section 16.05 No Oral Modifications or Continuing Waivers; Consents.........
Section 16.06 Effect of Headings and Table of Contents......................
Section 16.07 Successors and Assigns........................................
Section 16.08 Benefits of Agreement.........................................
Section 16.09 Counterparts..................................................
Section 16.10 Submission to Jurisdiction....................................
Section 16.11 Obligations of Owner Trustee..................................
Section 16.12 Payments to Owner Participant.................................
Section 16.13 Section 1110..................................................
Schedule I - Commitments
Schedule II - Trust Supplements
Exhibit A-1 - Form of Opinion of Counsel for Lessee
Exhibit A-2 - Form of Opinion of Cadwalader, Wickersham & Taft,
special counsel for Lessee
Exhibit A-3 - Form ofss. 1110 Opinion of Cadwalader, Wickersham &
Taft, special counsel for Lessee
Exhibit B - Form of Opinion of Special Counsel for Loan
Trustee, Subordination Agent and State Street
Exhibit C - Form of Opinion of Special FAA Counsel
Exhibit D - Form of Opinion of Ray, Quinney and Nebeker,
special counsel for Owner Trustee
Exhibit E-1 - Form of Opinion of [_______], special counsel for
Owner Participant
Exhibit E-2 - Form of Opinion of in-house counsel for Owner
Participant
Exhibit F - Form of Opinion of counsel for Manufacturer
Exhibit G - Form of Opinion of Special Counsel for Pass
Through Trustees
Exhibit H - Form of Opinion of Cadwalader, Wickersham & Taft,
special counsel for Lessee, pursuant to Section
7.11 of the Original Participation Agreement
Exhibit I - Schedule of Countries
Exhibit J - Return Conditions
Annex A - Definitions
AMENDED AND RESTATED PARTICIPATION AGREEMENT
(N[_____])
This AMENDED AND RESTATED PARTICIPATION AGREEMENT (N[_____]), dated
as of _____ __, 200_, is made by and among DELTA AIR LINES, INC., a Delaware
corporation (together with its successors and permitted assigns, "Lessee"),
[______________], a [_________] corporation ("Owner Participant"), STATE STREET
BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association (in its individual capacity, together with its successors and
permitted assigns, "State Street"), not in its individual capacity except as
otherwise expressly provided in any of the Operative Documents or the Pass
Through Documents, but solely as trustee (in such capacity together with any
successor or other trustee in such capacity, "Pass Through Trustee") under each
of the Pass Through Trust Agreements (such term and other capitalized terms used
herein without definition being defined as provided in Section 1.01), WELLS
FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity, except as expressly provided herein, but solely as
Owner Trustee under the Trust Agreement (herein, in such latter capacity,
together with any successor owner trustee, called "Owner Trustee"), STATE STREET
BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, as subordination agent and trustee (in such capacity, together with
any successor trustee in such capacity, "Subordination Agent") under the
Intercreditor Agreement, and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, as loan trustee (in such capacity, together with any
successor trustee in such capacity, "Loan Trustee") under the Indenture (as
hereinafter defined), does amend and restate in its entirety the Participation
Agreement (N[_____]), dated as of April 30, 2002, among Lessee, Pass Through
Trustee, Subordination Agent and Loan Trustee (the "Original Participation
Agreement"; and as so amended and restated hereby, the "Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement between Lessee and
Manufacturer, Manufacturer agreed to sell to Lessee certain Boeing Model 737-832
aircraft, including the Aircraft which has been delivered by Manufacturer to
Lessee and is the subject of this Agreement;
WHEREAS, pursuant to the Basic Pass Through Trust Agreement and each
of the Trust Supplements set forth in Schedule II, on the Issuance Date separate
Pass Through Trusts were created to facilitate certain of the transactions
contemplated hereby, including, without limitation, the issuance and sale of
Pass Through Certificates;
WHEREAS, on the Issuance Date, (i) Liquidity Provider entered into
the Liquidity Facilities, (ii) Policy Provider entered into the Policy Provider
Agreement, and (iii) Pass Through Trustee, Liquidity Provider, Policy Provider
and Subordination Agent entered into to the Intercreditor Agreement;
WHEREAS, the proceeds from the issuance and sale of the Pass Through
Certificates were applied in part by Pass Through Trustee on April 30, 2002 to
purchase from Lessee, on behalf of each Pass Through Trust, all of the Equipment
Notes (the "Original Equipment Notes") issued by Lessee pursuant to the Original
Indenture bearing the same interest rate as the Pass Through Certificates issued
by such Pass Through Trust;
WHEREAS, the Original Equipment Notes were registered in the name
of, and held by, Subordination Agent pursuant to the Intercreditor Agreement on
behalf of the Pass Through Trusts;
WHEREAS, the aggregate purchase price of the Original Equipment
Notes paid by Pass Through Trustee for each Pass Through Trust for the Original
Equipment Notes is set forth on Schedule I to the Original Participation
Agreement opposite the name of such Pass Through Trust;
WHEREAS, pursuant to Section 7.11 of the Original Participation
Agreement, the parties to the Original Participation Agreement contemplated
amending and restating the Original Participation Agreement by entering into
this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Owner Participant is entering into the Trust Agreement with Owner
Trustee, pursuant to which Owner Trustee agrees, among other things, to hold the
Trust Estate (defined in Section 1.01 thereof and herein called the "Trust
Estate") for the use and benefit of Owner Participant;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Loan Trustee and Owner Trustee are entering into the Amended and
Restated Indenture, pursuant to which, among other things, Owner Trustee will
issue new Equipment Notes (the "Assumed Equipment Notes", and individually, an
"Assumed Equipment Note") in three series, which Assumed Equipment Notes are to
be secured by a security interest in all right, title and interest of Owner
Trustee in and to the Aircraft and certain other property described in the
Indenture in favor of Loan Trustee;
WHEREAS, the Assumed Equipment Notes will be held by Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Owner Trustee and Lessee have entered into the Lease, whereby,
subject to the terms and conditions set forth therein, Owner Trustee agrees to
lease the Aircraft to Lessee, and Lessee agrees to lease the Aircraft from Owner
Trustee on the date (the "Delivery Date") that the Aircraft is sold and
delivered by Lessee to Owner Trustee under the Bill of Sale, and accepted by
Owner Trustee for all purposes of the Lease, such lease to be evidenced by the
execution and delivery of a Lease Supplement covering the Aircraft;
WHEREAS, concurrently with the execution and delivery of this
Agreement, Owner Participant is entering into the Tax Indemnity Agreement with
Lessee; and
WHEREAS, concurrently with the execution and delivery of this
Agreement,
Lessee and Owner Trustee are entering into the Purchase Agreement
Assignment; and
Manufacturer has executed the Manufacturer's Consent; and
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained, and of other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. For the purposes of this Agreement, 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 Agreement 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 Agreement, unless otherwise
specifically stated.
(c) The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision.
(d) All references in this Agreement to a "government" are to such
government and any instrumentality or agency thereof.
(e) 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".
(f) Unless the context requires otherwise, any reference herein to
any Operative Document refers to such document as it may be amended from time to
time.
ARTICLE 2
PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT
Section 2.01 Participation by Pass Through Trustee. Subject to the
terms and conditions of this Agreement, Pass Through Trustee for each Pass
Through Trust agrees to finance, in part, Owner Trustee's payment of Lessor's
Cost for the Aircraft by consenting to the assumption by Owner Trustee of the
Original Indenture and the Original Equipment Notes in accordance with the terms
and conditions of the Amended and Restated Indenture (with an unpaid principal
amount as set forth on Schedule I opposite the name of such Pass Through Trust)
and releasing Lessee from certain of Lessee's liabilities and obligations under
the Original Indenture and the Original Equipment Notes as provided in Section
14.01, which consent shall be evidenced by the surrender of the Original
Equipment Notes by Subordination Agent (on behalf of Pass Through Trustee of
each Pass Through Trust) to Loan Trustee for cancellation.
Upon the delivery of the above consent by Pass Through Trustee for
each Pass Through Trust, and the delivery of the Original Equipment Notes by
Subordination Agent to Loan Trustee for cancellation, Owner Trustee shall, at
the direction of Owner Participant, pursuant to and in accordance with Article
II of the Amended and Restated Indenture, issue to Subordination Agent as agent
and trustee for Pass Through Trustee for each Pass Through Trust, the Assumed
Equipment Notes having the maturity and aggregate principal amount and bearing
the interest rate set forth in Schedule I opposite the name of such Pass Through
Trust. Each such Assumed Equipment Note shall be duly authenticated by Loan
Trustee pursuant to the Amended and Restated Indenture, registered in the name
of Subordination Agent and dated the Delivery Date and shall be delivered by
Loan Trustee to Subordination Agent.
Section 2.02 Participation by Owner Participant. Subject to the
terms and conditions of this Agreement, Owner Participant hereby agrees to
participate in the payment of Lessor's Cost for the Aircraft by making an equity
investment in the beneficial ownership of the Aircraft on the Delivery Date, by
transferring to the account of Owner Trustee at State Street Bank and Trust
Company, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-000-028,
Account No. 9903-990-1, Reference: Delta (N[_____]), no later than 9:30 a.m.
(New York City time) on the Delivery Date in immediately available funds in
Dollars, the amount set forth opposite the name of Owner Participant on Schedule
I.
Section 2.03 General Provisions. The amount of the participation of
each of Pass Through Trustee and Owner Participant to be made as provided above
in the financing or payment of Lessor's Cost for the Aircraft is hereinafter
called such party's "Commitment" for the Aircraft. If either of Pass Through
Trustee or Owner Participant defaults in its obligations pursuant to this
Article 2, the other party shall have no obligation to make any portion of such
defaulted amount available or to increase the amount of its Commitment and the
obligation of such nondefaulting party shall remain subject to the terms and
conditions set forth in this Agreement. Upon receipt by Owner Trustee of all
amounts to be furnished to it on the Delivery Date pursuant to this Article 2,
Owner Trustee's assumption of the Original Indenture and the Original Equipment
Notes, Lessee's release from the Original Indenture and the Original Equipment
Notes as provided in Article 14 and the satisfaction of the conditions set forth
in Article 3, Lessee shall transfer title to and deliver the Aircraft to Owner
Trustee, and Owner Trustee shall purchase and take title to and accept delivery
of the Aircraft. In consideration of the transfer of title to and delivery of
the Aircraft to Owner Trustee, Owner Trustee shall, simultaneously with such
transfer of title and delivery, pay to Lessee Lessor's Cost for the Aircraft by
paying to Lessee the amount so furnished to it by Owner Participant, and by
assuming the Original Indenture and the Original Equipment Notes as provided in
Article 14.
Section 2.04 The Closing. The closing (the "Closing") of the
transactions contemplated hereby shall take place at the offices of Cadwalader,
Wickersham & Taft, 100 Maiden Lane, New York, New York at 9:30 a.m. (New York
City time) on [_______ __, 200_], or at such other time or place as the parties
shall agree.
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.01 Conditions Precedent to the Participations in the
Aircraft. The obligations of each Pass Through Trustee and Owner Participant to
participate in the financing or payment of Lessor's Cost and to make available
the amount of its respective Commitment as contemplated by Article 2 are subject
to the fulfillment (or the waiver by such Pass Through Trustee or Owner
Participant, as applicable) prior to or on the Delivery Date of the following
conditions precedent, except that Subsections (b), (d)(vii), (n), (v), (w), (x)
and (bb) shall not be a condition precedent to the obligations of Pass Through
Trustee, and Subsections (c), (f)(vi), (l), (r), (z) and (aa) shall not be a
condition precedent to the obligations of Owner Participant:
(a) No change shall have occurred after the date of this Agreement
in applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it a violation
of law or governmental regulations for Pass Through Trustee or Owner Participant
to make its Commitment available as contemplated by Section 2.01 or Section
2.02.
(b) In the case of Owner Participant, each Pass Through Trustee
shall have made available the amount of its Commitment for the Aircraft in
accordance with Article 2.
(c) In the case of Pass Through Trustee, Owner Participant shall
have made available the amount of its Commitment for the Aircraft in accordance
with Article 2.
(d) This Agreement and the following documents shall have been duly
authorized, executed and delivered by the respective party or parties thereto,
shall be in full force and effect and executed counterparts thereof (or copies
where indicated) shall have been delivered to each Pass Through Trustee and
Owner Participant or their respective counsel, provided that: (1) only
Subordination Agent on behalf of each Pass Through Trustee shall receive an
executed original of such Pass Through Trustee's respective Assumed Equipment
Note, (2) the chattel paper counterpart of the Lease and the Lease Supplement
covering the Aircraft dated the Delivery Date shall be delivered to Loan
Trustee, and (3) the Tax Indemnity Agreement need only be satisfactory to Owner
Participant and Lessee and the Tax Indemnity Agreement shall only be delivered
to Lessee and Owner Participant and their respective counsel:
(i) an excerpted copy of the Purchase Agreement as it relates to
Warranty Rights;
(ii) the Purchase Agreement Assignment;
(iii) the Manufacturer's Consent;
(iv) the Lease;
(v) a Lease Supplement covering the Aircraft dated the Delivery
Date;
(vi) the Trust Agreement;
(vii) the Tax Indemnity Agreement;
(viii) the FAA Bill of Sale;
(ix) the Bill of Sale;
(x) the Amended and Restated Indenture;
(xi) an Indenture Supplement covering the Aircraft dated the
Delivery Date; and
(xii) the Assumed Equipment Notes.
In addition, Pass Through Trustee and Owner Participant each shall
have received executed counterparts or conformed copies of the following
documents:
(xiii) each of the Pass Through Trust Agreements;
(xiv) the Intercreditor Agreement;
(xv) the Liquidity Facilities;
(xvi) the Policy Provider Agreement;
(xvii) the Original Participation Agreement; and
(xviii) the Original Indenture.
(e) A Uniform Commercial Code financing statement or statements
covering the security interest created by or pursuant to the Granting Clause of
the Amended and Restated Indenture that are not covered by the recording system
established by the Transportation Code shall have been executed and delivered by
Owner Trustee, and such financing statement or statements shall have been duly
filed (or will be filed promptly after the Closing) in all places necessary or
advisable, and any additional Uniform Commercial Code financing statements
deemed advisable by Owner Participant or Pass Through Trustee shall have been
executed and delivered by Lessee (if necessary) or Owner Trustee and duly filed
(or will be filed promptly after the Closing).
(f) Each Pass Through Trustee and Owner Participant shall have
received the following:
(i) a certificate dated the Delivery Date of the Secretary or an
Assistant Secretary of Lessee, certifying as to (A) a copy of the
resolutions of the Board of Directors of Lessee or the executive committee
thereof duly authorizing the transactions contemplated hereby and the
execution, delivery and performance by Lessee of this Agreement and the
Lease and each other document required to be executed and delivered by
Lessee in accordance with the provisions hereof or thereof and (B) a copy
of the certificate of incorporation and by-laws of Lessee, as in effect on
the Delivery Date;
(ii) a certificate or other evidence from the Secretary of State of
the State of Delaware, dated as of a date reasonably near the Delivery
Date, as to the due incorporation and good standing of Lessee in such
state;
(iii) an incumbency certificate of Lessee as to the person or
persons authorized to execute and deliver this Agreement, the Lease and
each other document to be executed by Lessee in connection with the
transactions contemplated hereby and thereby, and the specimen signatures
of such person or persons;
(iv) one or more certificates of Loan Trustee and Subordination
Agent certifying to the reasonable satisfaction of Pass Through Trustee,
Owner Participant and Lessee as to the due authorization, execution,
delivery and performance by Loan Trustee and Subordination Agent of each
of the Operative Documents to which Loan Trustee or Subordination Agent is
or will be a party and any other documents to be executed by or on behalf
of Loan Trustee or Subordination Agent in connection with the transactions
contemplated hereby or thereby (including the incumbency of the person or
persons authorized to execute such documentation) and as to the articles
of association and by-laws of Loan Trustee and Subordination Agent;
(v) one or more certificates of Owner Trustee certifying to the
reasonable satisfaction of Pass Through Trustee, Owner Participant and
Lessee as to the due authorization, execution, delivery and performance by
Owner Trustee of each of the Operative Documents to which Owner Trustee is
or will be a party and any other documents to be executed by or on behalf
of Owner Trustee in connection with the transactions contemplated hereby
or thereby (including the incumbency of the person or persons authorized
to execute such documentation) and as to the articles of association and
by-laws of Owner Trustee; and
(vi) one or more certificates of Owner Participant certifying to the
reasonable satisfaction of Pass Through Trustee and Lessee as to the due
authorization, execution, delivery and performance by Owner Participant of
each of the Operative Documents to which Owner Participant is or will be a
party and any other documents to be executed by or on behalf of Owner
Participant in connection with the transactions contemplated hereby or
thereby (including the incumbency of the person or persons authorized to
execute such documentation) and as to the articles of association and
by-laws of Owner Participant.
(g) On the Delivery Date, the following statements shall be correct:
(i) the representations and warranties of Lessee herein are correct in all
material respects as though made on and as of such date (other than those
contained in Section 4.01(c)(v) and except to the extent that such
representations and warranties relate solely to an earlier date, in which case
such representations and warranties are correct on and as of such earlier date),
(ii) no event has occurred and is continuing that constitutes an Event of
Default or an Event of Loss or would constitute an Event of Default or Event of
Loss but for the requirement that notice be given or time elapse or both and
(iii)(A) the Aircraft possesses an appropriate FAA type certificate and a
current certificate of airworthiness, (B) the FAA Bill of Sale, the Lease, the
Lease Supplement, the Amended and Restated Indenture and the Indenture
Supplement covering the Aircraft shall have been duly filed for recordation (or
shall be in the process of being so duly filed for recordation) with the FAA
pursuant to the Transportation Code, and the Trust Agreement shall have been
filed (or shall be in the process of being so filed) with the FAA, and (C)
application for registration of the Aircraft in the name of Owner Trustee has
been duly made with the FAA (or shall be in the process of being so made).
(h) Each Pass Through Trustee, Owner Participant and Loan Trustee
shall have received (i) an opinion addressed to it from internal counsel to
Lessee substantially in the form set forth in Exhibit A-1 and (ii) opinions
addressed to it from Cadwalader, Wickersham & Taft substantially in the forms
set forth in Exhibits A-2 and A-3.
(i) Each Pass Through Trustee, Owner Participant and Loan Trustee
shall have received an opinion addressed to it from Bingham Dana LLP, special
counsel for State Street, Loan Trustee and Subordination Agent, substantially in
the form set forth in Exhibit B.
(j) Each Pass Through Trustee, Owner Participant and Loan Trustee
shall have received an opinion addressed to it from Daugherty, Fowler, Peregrin
& Haught, A Professional Corporation, special FAA counsel in Oklahoma City,
Oklahoma, substantially in the form set forth in Exhibit C.
(k) Each Pass Through Trustee, Owner Participant and Loan Trustee
shall have received an opinion addressed to it from Ray, Quinney and Nebeker,
special counsel for Owner Trustee, substantially in the form set forth in
Exhibit D.
(l) Each Pass Through Trustee and Loan Trustee shall have received
(i) an opinion addressed to it from [____________], special counsel for Owner
Participant, substantially in the form set forth in Exhibit E-1 and (ii) an
opinion addressed to it from in-house counsel for Owner Participant,
substantially in the form set forth in Exhibit E-2.
(m) Each Pass Through Trustee, Owner Participant and Loan Trustee
shall have received an opinion addressed to it from counsel to Manufacturer,
substantially in the form set forth in Exhibit F.
(n) Owner Participant shall have received an opinion addressed to it
from Bingham Dana LLP, special counsel for Pass Through Trustee, substantially
in the form of Exhibit G.
(o) Each Pass Through Trustee, Owner Participant and Loan Trustee
shall have received a certificate or certificates signed by any Senior Vice
President, the Treasurer, any Vice President or any Assistant Treasurer (or any
other Responsible Officer) of Lessee, dated the Delivery Date, certifying as to
the correctness of each of the matters stated in Section 3.01(g).
(p) Each Pass Through Trustee and Owner Participant shall have
received a certificate from State Street in its individual capacity and as Loan
Trustee and Subordination Agent, as applicable, dated the Delivery Date, signed
by an authorized officer of State Street in its individual capacity and as Loan
Trustee and Subordination Agent, as applicable, certifying for each such entity
that no Loan Trustee Liens or Other Party Liens attributable to it, as
applicable, exist, and further certifying that the representations and
warranties contained herein of State Street, in its individual capacity and as
Loan Trustee and as Subordination Agent, as applicable, are correct as though
made on and as of the Delivery Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties are correct as of such earlier date).
(q) Each Pass Through Trustee, Owner Participant and Loan Trustee
shall have received a certificate from Owner Trustee (in its individual capacity
and as trustee), dated the Delivery Date, signed by an authorized officer of
Owner Trustee in its individual capacity and as Owner Trustee, as applicable,
certifying that the representations and warranties contained herein of Owner
Trustee (in its individual capacity and as trustee) are correct as though made
on and as of the Delivery Date, except to the extent that such representations
and warranties relate solely to an earlier date (in which case such
representations and warranties are correct on and as of such earlier date).
(r) Each Pass Through Trustee and Loan Trustee shall have received a
certificate from Owner Participant, dated the Delivery Date, signed by an
authorized officer of Owner Participant, certifying that the representations and
warranties of Owner Participant contained herein are correct as though made on
and as of the Delivery Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(s) Each Pass Through Trustee, Loan Trustee, and Owner Participant
shall have received an insurance report of an independent insurance broker and
the related certificates of insurance, each in form and substance reasonably
satisfactory to Loan Trustee and Owner Participant, as to the compliance with
the terms of Section 11 of the Lease.
(t) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency, nor
shall any order, judgment or decree have been issued or proposed to be issued by
any court or governmental agency at the time of the Closing to set aside,
restrain, enjoin or prevent the completion and consummation of this Agreement or
the transactions contemplated hereby.
(u) Lessor's Cost for the Aircraft shall be $[__________].
(v) Owner Participant shall have received an appraisal from [_____],
independent aircraft appraisers, satisfactory in form and substance to Owner
Participant, addressing such matters with respect to the Aircraft and the Lease
as Owner Participant requests.
(w) In the opinion of Owner Participant and its special tax counsel,
there shall have been, since the date hereof, no amendment, modification,
addition or change in or to the provisions of the Internal Revenue Code of 1986,
as amended through the date hereof, and the regulations promulgated under the
Code (including temporary regulations), Internal Revenue Service Revenue
Procedures or Revenue Rulings, or other administrative interpretations,
applicable judicial precedents or Executive Orders of the President of the
United States, all as in effect on the date hereof, the effect of which might
preclude Owner Participant from obtaining any of the income tax benefits and
consequences assumed to be available to Owner Participant as set forth in
Section 2 of the Tax Indemnity Agreement.
(x) Owner Participant shall have received from [__________________],
special tax counsel to Owner Participant, an opinion, in form and substance
satisfactory to Owner Participant, with respect to certain Federal income tax
aspects of the transaction contemplated by the Operative Documents.
(y) Subordination Agent (on behalf of Pass Through Trustee for each
of the Pass Through Trusts) shall have delivered the Original Equipment Notes to
Loan Trustee for cancellation, and the Original Equipment Notes shall have been
canceled by Loan Trustee.
(z) Each Pass Through Trustee and Loan Trustee shall have received
an opinion addressed to it from Cadwalader, Wickersham & Taft, substantially in
the form set forth in Exhibit H.
(aa) Each Pass Through Trustee and Loan Trustee shall have received
a certificate from Lessee, dated the Delivery Date, signed by an authorized
officer of Lessee, certifying as to matters relating to Section 7.11 of the
Original Participation Agreement.
(bb) Babcock & Brown LP and certain parties to this Agreement shall
have entered into a designation agreement within the meaning of Temporary
Regulation Section 301.6111-1T in form and substance satisfactory to Owner
Participant and Lessee pursuant to which Babcock & Brown LP agrees to act as
"designated organizer" and timely and accurately file IRS Form 8264 and required
information with the Internal Revenue Service with respect to the Overall
Transaction and otherwise satisfy all of the obligations of a designated
organizer as provided in Temporary Regulation Sections 301.6111-1T and
301.6111-2T.
Promptly upon the registration of the Aircraft and the recording of
the Amended and Restated Indenture, the Lease, the Lease Supplement and the
Indenture Supplement pursuant to the Transportation Code, Lessee will cause
Daugherty, Fowler, Peregrin & Haught, A Professional Corporation, special FAA
counsel in Oklahoma City, Oklahoma to deliver to Loan Trustee, Owner
Participant, Owner Trustee, Lessee and, on behalf of Pass Through Trustees,
Subordination Agent an opinion as to the due and valid registration of the
Aircraft in the name of Owner Trustee, the due recording of the FAA Bill of
Sale, the Amended and Restated Indenture, the Lease, such Lease Supplement and
such Indenture Supplement and the filing of the Trust Agreement and the lack of
filing of any intervening documents with respect to the Aircraft.
Section 3.02 Conditions Precedent to Obligations of Lessee. The
obligation of Lessee to sell the Aircraft to Owner Trustee and to accept
delivery of the Aircraft under the Lease and the obligations of Lessee to enter
into the Operative Documents are all subject to the fulfillment (or waiver by
Lessee) prior to or on the Delivery Date of the following conditions precedent:
(a) No change shall have occurred after the date of this Agreement
in applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it a violation
of law or governmental regulations for Lessee to enter into any transaction
contemplated by the Operative Documents.
(b) The documents referred to in Section 3.01(d) shall have been
duly authorized, executed and delivered by the respective party or parties
thereto (other than Lessee), shall be in full force and effect and executed
counterparts (or copies thereof where indicated) thereof shall have been
delivered to Lessee, Lessee shall have received each certificate referred to in
Subsections 3.01(f)(iv), (v) and (vi) and 3.01(p), (q) and (r), in each case
certified to Lessee, and Lessee shall have received such other documents and
evidence with respect to State Street, Loan Trustee, Subordination Agent, Owner
Trustee, Owner Participant and each Pass Through Trustee as Lessee reasonably
requests in order to establish the consummation of the transactions contemplated
by this Agreement, the taking of all corporate and other proceedings in
connection therewith and compliance with the conditions herein set forth.
(c) The FAA Bill of Sale, the Lease, the Lease Supplement covering
the Aircraft, the Amended and Restated Indenture and the Indenture Supplement
covering the Aircraft shall have been duly filed for recordation (or shall be in
the process of being so duly filed for recordation) with the FAA pursuant to the
Transportation Code and the Trust Agreement shall have been filed (or shall be
in the process of being filed) with the FAA.
(d) Lessee shall have received each opinion referred to in
Subsections 3.01(i), 3.01(j), 3.01(k), 3.01(l), 3.01(m) and 3.01(n), each such
opinion addressed to Lessee.
(e) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency, nor
shall any order, judgment or decree have been issued or proposed to be issued by
any court or governmental agency at the time of the Closing to set aside,
restrain, enjoin or prevent the completion and consummation of this Agreement or
the transactions contemplated hereby.
(f) Lessee shall have been paid Lessor's Cost for the Aircraft.
(g) Subordination Agent (on behalf of Pass Through Trustee for each
of the Pass Through Trusts) shall have delivered the Original Equipment Notes to
Loan Trustee for cancellation, and the Original Equipment Notes shall have been
canceled by Loan Trustee.
(h) In the opinion of Lessee and its special counsel, there shall
have been, since the date hereof, no amendment, modification, addition or change
in or to the Internal Revenue Code of 1986, as amended through the date hereof,
the regulations promulgated under the Code (including temporary regulations),
Internal Revenue Service Revenue Procedures or Revenue Rulings, or other
administrative interpretations, applicable judicial precedents or Executive
Orders of the President of the United States, which might give rise to an
indemnity obligation of Lessee under any of the Operative Documents.
(i) Babcock & Brown LP and certain parties to this Agreement shall
have entered into a designation agreement within the meaning of Temporary
Regulation Section 301.6111-1T in form and substance satisfactory to Owner
Participant and Lessee pursuant to which Babcock & Brown LP agrees to act as
"designated organizer" and timely and accurately file IRS Form 8264 and required
information with the Internal Revenue Service with respect to the Overall
Transaction and otherwise satisfy all of the obligations of a designated
organizer as provided in Temporary Regulation Sections 301.6111-1T and
301.6111-2T.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF LESSEE
Section 4.01 Representations and Warranties of Lessee. Lessee
represents and warrants to each other party hereto that as of the Delivery Date:
(a) Lessee is a corporation duly incorporated and validly existing
in good standing under the laws of the State of Delaware, is a Certificated Air
Carrier, is a Citizen of the United States, has the corporate power and
authority to own its properties or hold them under lease and to enter into and
perform its obligations under the Operative Documents to which it is a party and
is duly qualified to do business as a foreign corporation in good standing in
each other jurisdiction in which the failure to so qualify would have a material
adverse effect on the consolidated financial condition of Lessee and its
subsidiaries, considered as a whole, and its jurisdiction of organization (as
such term is used in Article 9 of the Uniform Commercial Code as in effect in
the State of Delaware) is Delaware.
(b) The execution, delivery and performance by Lessee of this
Agreement and the other Operative Documents to which Lessee is a party have been
duly authorized by all necessary corporate action on the part of Lessee, do not
require any stockholder approval or approval or consent of any trustee or holder
of any indebtedness or obligations of Lessee, except such as have been duly
obtained and are in full force and effect, and do not contravene any law,
governmental rule, regulation, judgment or order binding on Lessee or the
certificate of incorporation or by-laws of Lessee or contravene or result in a
breach of, or constitute a default under, or result in the creation of any Lien
(other than Permitted Liens) upon the property of Lessee under, any material
indenture, mortgage, contract or other agreement to which Lessee is a party or
by which it or any of its properties may be bound or affected.
(c) Neither the execution and delivery by Lessee of this Agreement
and the other Operative Documents to which it is a party, nor the consummation
by Lessee of any of the transactions contemplated hereby or thereby, requires
the authorization, consent or approval of, the giving of notice to, the filing
or registration with or the taking of any other action in respect of, the
Department of Transportation, the FAA or any other federal or state governmental
authority or agency, except for (i) the registration of the Pass Through
Certificates under the Securities Act of 1933, as amended, and under the
securities laws of any state in which the Pass Through Certificates may be
offered for sale if the laws of such state require such action, (ii) the
qualification of the Pass Through Trust Agreements under the Trust Indenture Act
of 1939, as amended, (iii) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having jurisdiction
over Lessee's operation of the Aircraft required to be obtained on or prior to
the Delivery Date, which orders, permits, waivers, exemptions, authorizations
and approvals have been duly obtained and are, or on the Delivery Date will be,
in full force and effect, (iv) the filings referred to in Section 4.01(e) and
(v) consents, approvals, notices, registrations and other actions required to be
obtained, given, made or taken only after the date hereof.
(d) This Agreement and each other Operative Document to which Lessee
is a party have been duly executed and delivered by Lessee and constitute the
legal, valid and binding obligations of Lessee enforceable against Lessee in
accordance with their terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of equity and except, in
the case of the Lease, as limited by applicable laws that may affect the
remedies provided in the Lease.
(e) Except for (i)(A) the filing for recordation pursuant to the
Transportation Code of the Original Indenture, (B) the filing of the Trust
Agreement with the FAA, (C) the registration of the Aircraft pursuant to the
Transportation Code and (D) the filing for recording pursuant to the
Transportation Code of the FAA Bill of Sale, the Amended and Restated Indenture
(with the Indenture Supplement covering the Aircraft attached) and the Lease
(with the Lease Supplement covering the Aircraft, the Amended and Restated
Indenture and the Indenture Supplement covering the Aircraft attached), (ii)
with respect to the security interests created by such documents, the filing of
financing statements (and continuation statements at periodic intervals) under
the Uniform Commercial Code of Delaware and Utah and the filing of UCC-3
termination statements relating to the financing statements filed in connection
with the Original Indenture and (iii) the taking of possession by Loan Trustee
of the original chattel paper counterpart of the Lease and the Lease Supplement
covering the Aircraft, no further filing or recording of any document is
necessary under the laws of the United States or any state thereof as of the
Delivery Date in order to establish and perfect Owner Trustee's interest in the
Aircraft as against Lessee and any third parties, or to establish and perfect
the security interest created under the Amended and Restated Indenture in favor
of Loan Trustee in Owner Trustee's interest in the Aircraft and in the Lease in
any applicable jurisdiction in the United States.
(f) Lessee is not an investment company or a company controlled by
an investment company within the meaning of the Investment Company Act of 1940,
as amended.
(g) Neither Lessee nor any if its Affiliates has directly or
indirectly offered the Pass Through Certificates or the Equipment Notes or any
similar securities for sale to any Person other than in a manner permitted by
the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
(h) Lessee is solvent and will not be rendered insolvent by the sale
of the Aircraft; after the sale of the Aircraft, the capital of Lessee will not
be unreasonably small for the conduct of the business in which Lessee is engaged
or is about to engage; Lessee has no intention or belief that it is about to
incur debts beyond its ability to pay as they mature; and Lessee's sale of the
Aircraft is made without any intent to hinder, delay or defraud Lessee's present
or future creditors.
(i) None of the proceeds from the issuance of the Equipment Notes or
from the acquisition by Owner Participant of its beneficial interest in the
Trust Estate will be used directly or indirectly by Lessee to purchase or carry
any "margin security" as such term is defined in Regulation U of the Board of
Governors of the Federal Reserve System.
(j) Owner Trustee will receive good and transferable title to the
Aircraft from Lessee free and clear of all Liens, except the rights of Lessee
under the Lease and the Lease Supplement, the Lien of the Indenture, the
beneficial interest of Owner Participant and the Liens permitted by clause (v)
of Section 6 of the Lease.
(k) On the Delivery Date, all sales or use tax then due and for
which Lessee is responsible pursuant to Section 4.02 shall have been paid, other
than such taxes which are being contested by Lessee in good faith and by
appropriate proceedings so long as such proceedings do not involve any material
risk of the sale, forfeiture or loss of the Aircraft.
Section 4.02 General Tax Indemnity.
(a) General. Subject to Subsection 4.02(b), Lessee shall pay, and
shall indemnify and hold harmless on an After-Tax Basis each Tax Indemnitee from
and against, any and all Taxes, however imposed, whether levied or imposed upon
such Tax Indemnitee, Lessee, or the Aircraft, an Engine, or any Part thereof or
interest therein, by any federal, state or local taxing authority within the
United States or any territory or possession thereof, or by any foreign or
international taxing authority ("Taxing Authority") relating to: (A) the
Aircraft, Airframe, or any Engine or Part, or any interest therein, (B) the
acquisition, manufacture, purchase, mortgaging, initial financing, refinancing
at Lessee's request, ownership, delivery, nondelivery, redelivery, transport,
location, lease, sublease, hire, assignment, alteration, improvement,
possession, registration, deregistration, transfer of registration, presence,
use, replacement, substitution, pooling, operation, insurance, installation,
modification, rebuilding, overhaul, condition, storage, maintenance, repair,
sale, return, abandonment, preparation, transfer of title, acceptance,
importation, exportation, rejection, or disposition of the Aircraft, or any
Engine, any Part, or any interest in any of the foregoing; (C) the rentals,
receipts, income or earnings arising therefrom; (D) the Equipment Notes or the
Pass Through Certificate(s), or the issuance, acquisition, transfer, or
assumption thereof by Lessee, or refinancing thereof caused by Lessee, or the
payment of any amounts thereon; (E) the execution, delivery, or performance of
any of the Operative Documents or any future amendment, supplement, waiver, or
consent thereto requested or consented to by Lessee, or any proceeds or payments
or amounts payable under any thereof; or (F) otherwise with respect to, or in
connection with, the transactions contemplated by the Operative Documents.
(b) Exclusions. Notwithstanding the foregoing, the provisions of
Section 4.02(a) shall not obligate Lessee to pay or indemnify for any of the
following:
(i) Any Taxes imposed by the United States or by any state or local
Taxing Authority thereof on, based on, or measured by the gross or net
income, gross or net receipts, minimum Tax, capital, net worth, branch
profits, franchise, excess profits, value added, ad valorem, or conduct of
business of any Tax Indemnitee in each case however denominated (other
than any such Taxes which are in the nature of a sales, use, license, or
property Tax) ("Income Taxes");
(ii) Any Income Tax imposed on any Tax Indemnitee by any foreign or
international Taxing Authority or by any territory or possession of the
United States except to the extent such Tax Indemnitee would have been
subject to such Income Tax if the sole connection between such Tax
Indemnitee and the Taxing Authority had been the operation, location,
presence or use of the Aircraft, or the activities of Lessee or any
sublessee, within the Taxing Authority;
(iii) Taxes imposed with respect to any period after the earlier of
(x) the return of possession of the Aircraft to Owner Trustee or its
designee pursuant to the terms of the Lease and (y) the termination of the
Lease in accordance with Section 9 or Section 19 thereof;
(iv) Any capital gains Taxes, excess profits Taxes, value added
Taxes, minimum and/or alternative minimum Taxes, accumulated earnings
Taxes, personal holding company Taxes, succession Taxes and estate or
other similar Taxes;
(v) Taxes imposed as a result of any Tax Indemnitee's transfer or
other disposition of all or a portion of its interest in the Aircraft or
any part thereof, the Trust Estate, the Indenture Estate, any Equipment
Note, or the Lease (including, without limitation, a transfer or
disposition resulting from the bankruptcy or other proceedings for the
relief of debtors in which the transferor is the Debtor), unless, in each
case, such transfer or disposition occurs pursuant to the termination of
the Lease pursuant to Section 9, 10, or 19 or such transfer or disposition
is pursuant to exercise of remedies pursuant to Section 15 of the Lease;
(vi) In the case of Owner Trustee, Pass Through Trustees and Loan
Trustee, Taxes on, with respect to, or measured by any fees received by
any such Trustee for services rendered in connection with any transaction
contemplated by the Operative Documents or the Pass Through Agreements;
(vii) Taxes to the extent resulting from the inaccuracy or breach of
any representation, warranty, covenant or agreement by any Tax Indemnitee
or any of its Affiliates under the Operative Documents or the negligence
or willful misconduct of any Tax Indemnitee or any of its affiliates;
(viii)In the case of Owner Trustee and Owner Participant, Taxes
subject to indemnification by Lessee pursuant to the Tax Indemnity
Agreement;
(ix) Any Taxes included in Lessor's Cost or Taxes that have been
paid by Lessee or Owner Trustee as "Transaction Expenses;"
(x) Any Tax to the extent that such Tax would not have been imposed
but for the failure of the Tax Indemnitee to comply with any
certification, documentation, or similar requirements concerning the
nationality, residence, or identity of such Tax Indemnitee which, if
properly complied with, would have resulted in an exemption from, or a
reduced rate of, such Tax or any penalty for which such Tax Indemnitee was
otherwise eligible;
(xi) In the case of Owner Trustee or Owner Participant, Taxes that
would have not been imposed but for a Lessor's Lien;
(xii) Taxes to the extent that such Tax would not have been imposed
on the Tax Indemnitee but for a present or future connection between such
Tax Indemnitee (or any of its Affiliates) and the Taxing Authority, other
than a connection arising solely by reason of the transactions
contemplated by the Operative Documents;
(xiii)In the case of Owner Participant and Owner Trustee, Taxes that
would not have been imposed but for the existence or status of any trust
used to hold title to the Aircraft;
(xiv) Taxes imposed in respect of a "prohibited transaction" within
the meaning of ERISA arising out of a breach by any Tax Indemnitee of its
representations, warranties or covenants;
(xv) Taxes imposed on any transferee of the interests held by a Tax
Indemnitee (a) if such Tax would not have been imposed on the original Tax
Indemnitee, or (b) to the extent such Tax exceeds the amount of Tax that
would have been imposed on the original Tax Indemnitee;
(xvi) Taxes during the period while being contested pursuant to the
provisions of Subsection 4.02(c); and
(xvii)Any Taxes imposed on a Tax Indemnitee related to the status of
such Tax Indemnitee or any of its affiliates being a manufacturer of the
Airframe, any Engine or Part.
(c) Contests. If any claim is made against any Tax Indemnitee or if
any proceeding is commenced against any Tax Indemnitee for any Taxes as to which
Lessee may have an indemnity obligation pursuant to Subsection 4.02(a), such Tax
Indemnitee shall notify Lessee of such claim immediately and, in any case,
within 30 days after such Tax Indemnitee receives notice of such claim or
proceeding; provided, that failure to provide such notice to Lessee shall not
affect the obligation of Lessee to provide indemnification hereunder with
respect to the Taxes that are the subject of such claim or proceeding unless and
except to the extent that (i) such failure (whether by adversely affecting a
counterclaim or defense, or otherwise) materially adversely affects the rights
or ability of Lessee to exercise its contest rights, or (ii) such failure
results in the imposition of, or an increase in the amount of, any penalties,
interest, or additions to Tax related to the Tax which is the subject of such
claim or proceeding. At Lessee's request Lessee shall be entitled at no cost or
expense to any Tax Indemnitee (A) in the case of a contest involving only Taxes
indemnified hereunder ("Indemnified Taxes") or (B) in any proceeding involving a
claim for one or more Indemnified Taxes as well as a claim for other Taxes,
where the contest of the claim for Indemnified Taxes can be severed from the
contest of other Taxes, to assume responsibility for and control of the contest
("Lessee Controlled Contest"). Unless otherwise required by law, any such
contest shall be conducted by and in the name of Lessee.
If a claim for Indemnified Taxes cannot be contested in a Lessee
Controlled Contest, upon Lessee's timely written request, the Tax Indemnitee
shall, in good faith, with due diligence, and at Lessee's expense, contest the
validity, applicability, or amount of such Taxes ("Tax Indemnitee Controlled
Contest"). In such Tax Indemnitee's discretion after consultation with Lessee
such contest may be conducted by (A) resisting payment thereof, (B) not paying
the same except under protest, if protest is necessary and proper, or (C) if
payment is made, using reasonable efforts to obtain promptly a refund thereof in
appropriate administrative and judicial proceedings. The Tax Indemnitee shall
not be required to take or continue any action pursuant to this paragraph unless
and until (1) Lessee agrees to pay and shall timely pay on demand to such Tax
Indemnitee all reasonable costs and expenses that such Tax Indemnitee actually
incurs in connection with and reasonably allocable to contesting such claim
(including reasonable legal and accounting fees, penalties, interest, and
addition to tax); (2) if a Payment Default has occurred and is continuing,
Lessee provides security for its obligations under this Subsection 4.02(c)
reasonably satisfactory to such Tax Indemnitee; (3) if the Tax Indemnitee
decides after consultation with Lessee to pay the Tax prior to the contest,
Lessee shall provide to the Tax Indemnitee an interest-free advance in an amount
equal to the Tax which the Tax Indemnitee determines to pay and shall, in such
case, pay any additional amount required to hold such Tax Indemnitee harmless
against any adverse Tax consequences arising from such advance (and if such
contest is finally determined adversely, the amount of such advance shall be
applied against Lessee's obligation to indemnify the Tax Indemnitee against the
Indemnified Tax which is the subject of such contest; and (4) the action to be
taken will not involve any risk of criminal liability on the Tax Indemnitee or a
material risk of a sale, forfeiture, or loss of, or the creation of any Lien on,
the Aircraft other than Permitted Liens unless (other than in the case of a risk
of criminal liability) Lessee posts a bond or other security reasonably
satisfactory to the Tax Indemnitee in respect of such risk.
If Lessee satisfies the applicable conditions imposed on it in this
Subsection 4.02(c) and a Tax Indemnitee nevertheless fails to contest or refuses
to permit Lessee to contest (or itself contest) under or as or to the extent
required by this Subsection 4.02(c), then Lessee shall not be obligated to
indemnify such Tax Indemnitee for such claim or for any other claim to the
extent that such failure to contest or to permit a contest materially adversely
affects the contest of such other claim or results in the imposition of, or an
increase in the amount of, any penalties, interest, or additions to Tax related
to the Tax which is the subject of such claim or proceeding. In addition,
subject to the terms of the preceding paragraph, the Tax Indemnitee shall not
settle, concede, or compromise any contest without Lessee's prior written
consent unless there is no liability against Lessee and the Tax Indemnitee
forgoes its right to be indemnified for such claim, and any such settlement,
concession, or compromise without the prior written consent of Lessee shall
constitute a waiver of such Tax Indemnitee's rights to indemnification hereunder
with respect to such claim and any other related claim for which a successful
contest is adversely affected in any material respect because of such
settlement, concession, or compromise. If the proposed settlement of a claim is
acceptable to the Tax Indemnitee but is unacceptable to Lessee, Lessee shall
inform such Tax Indemnitee of the amount for which Lessee would be willing to
settle such claim. Such Tax Indemnitee may then accept the settlement proposal;
provided, that the aggregate amount of Lessee's liability on account of such
claim (including any amount previously provided or paid by Lessee) under this
Subsection 4.02(c) in respect of such claim does not exceed the amount for which
Lessee would have been willing to settle such claim. Such Tax Indemnitee shall
promptly return to Lessee such portion of any amounts, previously advanced by
Lessee for the payment of the Taxes which were the subject of the contest, as
exceeds the amount to which Lessee was willing to settle such claim. If Lessee
notifies such Tax Indemnitee that the settlement proposal is unacceptable to
Lessee, the Tax Indemnitee shall treat such notification as Lessee's request
that such Tax Indemnitee continues to contest such claim for Taxes, in which
case Lessee's and such Tax Indemnitee's rights and obligations with respect to
such Taxes shall be as provided in this Subsection 4.02(c) without regard to the
settlement proposal. A Tax Indemnitee will not be required to appeal any adverse
decision to the United States Supreme Court or any corresponding court in a
jurisdiction outside the United States.
If any Tax Indemnitee actually obtains a refund (or would have
actually received such a refund but for offset by matters not indemnifiable by
Lessee under Section 4.02) of all or any part of any Tax paid or reimbursed by
Lessee, such Tax Indemnitee shall promptly pay to Lessee the amount equal to the
lesser of (x) the amount of such refund (or the amount of such offset) plus any
interest thereon received from the relevant Taxing Authority (or which would
have been received with respect to the amount of such an offset) plus the amount
of any Tax benefits realized by such Tax Indemnitee as a result of such payment
(and net of any net Tax detriment resulting from the receipt of the refund and
interest on the refund (after giving effect to such Tax Indemnitee's obligations
to make payments to Lessee under this sentence)), and (y) the sum of (i) such
Tax payment by Lessee to such Tax Indemnitee plus (ii) any interest received by
such Tax Indemnitee with respect to such refund or offset plus (iii) any other
payment (other than expenses of the contest) by Lessee to such Tax Indemnitee
already made (and not already repaid to Lessee) pursuant to this Section 4.02,
it being intended that such Tax Indemnitee shall be entitled to a net tax
benefit pursuant to this Section 4.02 only if Lessee has been reimbursed for any
payments made by it to such Tax Indemnitee pursuant to this Section 4.02. Such
amount shall not be payable before Lessee has made all payments or indemnities
then due and owing to such Tax Indemnitee by Lessee pursuant to the Operative
Documents, or while any Payment Default shall have occurred and is continuing.
Any subsequent loss or disallowance of such refund (as a result of a
redetermination of the claim giving rise to such refund by any Taxing Authority
or as a result of a judicial proceeding with respect to such claim) or Tax
benefit shall be treated as a Tax subject to indemnification under this Section
4.02. If a Tax Indemnitee receives an award of attorneys' fees in a contest for
which Lessee has paid an allocable portion of the contest expenses, such Tax
Indemnitee shall pay to Lessee that portion of the award that is directly
related to the issues contested with respect to an Indemnified Tax, taking into
account the rules applicable to obtaining such an award and any decision of the
court in making such award up to the amount of attorneys' fees paid or borne by
Lessee in connection with such contest.
No Tax Indemnitee is required to contest or permit the contest of a
claim pursuant to this Section 4.02 if such Tax Indemnitee waives payment by
Lessee of (x) any amount that might otherwise be payable by Lessee under this
Section 4.02 by way of indemnity in respect of such claim, and (y) any other
amount that might otherwise be payable by Lessee by way of indemnification in
respect of any other claim for which a successful contest is adversely affected
in any material respect because of such failure to contest. In such event, such
Indemnitee shall reimburse Lessee for all indemnity amounts paid by or on behalf
of Lessee with respect to such non-contested claim.
(d) Payments and Repayments. All Taxes shall be paid when due and
payable to the appropriate Taxing Authority, and all amounts payable as
indemnities pursuant to this Section 4.02 shall be payable, to the extent not
theretofore paid, on written demand by the appropriate Tax Indemnitee, except
that Taxes being contested pursuant to Subsection 4.02(c) shall not be required
to be paid, other than under clause (3) in the second paragraph of Subsection
4.02(c), before such contest is finally resolved. If, for any reason, Lessee
makes any payment with respect to any Taxes imposed on any Tax Indemnitee in
respect of the transactions contemplated by the Operative Documents or on the
Aircraft, which Taxes are not the responsibility of Lessee with respect to such
Tax Indemnitee under this Section 4.02, then such Tax Indemnitee shall pay to
Lessee within 30 days of Lessee's demand therefor an amount that equals the
amount paid by Lessee with respect to such Taxes, plus interest at the Debt Rate
for the Series G-1 Equipment Notes from the date paid by Lessee to the date
repaid to Lessee by such Tax Indemnitee.
(e) Reports and Returns. If any report or return is required to be
made with respect to any Indemnified Tax, Lessee shall in a timely and proper
fashion, (x) to the extent required or permitted by law, make and file such
return or report in its own name and (y) in the case of any such return or
report required to be made in the name of any Tax Indemnitee, inform such Tax
Indemnitee of such fact and prepare such return or report for filing by such Tax
Indemnitee or, where such return or report is required to reflect items in
addition to any obligations of Lessee under or arising out of this Section 4.02,
provide such Tax Indemnitee with information sufficient to permit such return or
report to be properly made and timely filed no later than 30 days prior to the
due date for filing such return or report. Each Tax Indemnitee shall provide to
Lessee such information within that Tax Indemnitee's possession or control as is
reasonably necessary for Lessee properly to complete and file any such report or
return.
(f) Receipts and Records. Lessee shall use reasonable efforts to
obtain official receipts indicating the payment of all Indemnified Taxes that
are paid by Lessee, and shall promptly on request send to the appropriate Tax
Indemnitee each such receipt obtained by Lessee. Within a reasonable time after
Lessee receives from a Tax Indemnitee a written request for specified
information or copies of specified records maintained in the regular course of
Lessee's business reasonably necessary to enable a Tax Indemnitee to fulfill its
Tax filing, Tax audit or other Tax obligations or to contest Taxes imposed upon
it, Lessee shall provide such information or copies of such records to such Tax
Indemnitee.
(g) Lessee a Primary Obligor. Lessee's obligations under the
indemnities provided for in this Section 4.02 are those of a primary obligor
whether or not the Tax Indemnitee is also indemnified against the same matter
under any other Operative Document or any other document or instrument, and the
Tax Indemnitee may proceed directly against Lessee without first seeking to
enforce any other right of indemnification. All indemnities payable by Lessee
pursuant to this Section 4.02 shall be treated as obligations of Lessee under
the Lease and each amount thereof shall constitute Supplemental Rent under the
Lease.
(h) Payments on After-Tax Basis, Tax Savings. Each payment and
indemnity by Lessee under this Section 4.02 shall be made on an After-Tax Basis.
If any Tax Indemnitee realizes any credits, deductions, or other tax benefits
(or would have realized such a benefit if properly claimed) by reason of such
payment or indemnity or, to the extent not otherwise taken into account in the
computation of such payment or indemnity, as a result of the imposition or
payment of any Tax with respect to which an indemnity has been paid hereunder,
such Indemnitee shall pay to Lessee an amount equal to the lesser of (1) the sum
of the amount by which such credits, deductions, and other tax benefits reduce
such Indemnitee's Taxes plus any tax benefit realized as the result of any
payment made pursuant to this sentence, and (2) the amount of such payment by
Lessee to or for the account of such Tax Indemnitee plus the amount of any other
payments other than expenses of the contest by Lessee to or for the account of
such Tax Indemnitee theretofore made (and not get repaid to Lessee pursuant to
this Subsection 4.02(h), with the excess of (1) over (2), if any, being carried
forward and applied to reduce pro tanto any subsequent obligations of Lessee to
make payments to such Tax Indemnitee pursuant to this Subsection 4.02, it being
intended that no Tax Indemnitee should be entitled to a net tax benefit pursuant
to this Subsection 4.02(h) unless Lessee shall concurrently be made whole for
any payments made by it to such Tax Indemnitee pursuant to Section 4.02). Any
Taxes that are imposed on any Tax Indemnitee as a result of the disallowance or
reduction in a subsequent tax year of a tax benefit referred to in the first
sentence of this Subsection 4.02(h) shall be indemnifiable pursuant to this
Section 4.02.
In determining the order in which any Tax Indemnitee utilizes
withholding or foreign taxes as a credit against such Tax Indemnitee's United
States income taxes, such Tax Indemnitee shall be deemed to utilize (i) first,
all foreign taxes other than those described in clause (ii) below; provided that
such foreign taxes which are carried back to the taxable year for which a
determination is being made shall be deemed utilized after foreign taxes
described in clause (ii) below, and (ii) then, on a pro rata basis, all foreign
taxes with respect to which such Tax Indemnitee is entitled to indemnification
pursuant to an indemnification provision contained in any lease, loan agreement,
or other financing document (including this Agreement) that is similar to the
indemnification provision in this Section 4.02.
Each Tax Indemnitee shall in good faith use reasonable efforts in
filing its tax returns and in dealing with Taxing Authorities to seek and claim
any tax savings which would result in payments to Lessee under this Section 4.02
and to minimize the net amount of any Lessee liability with respect to
Indemnified Taxes.
(i) Verification. At Lessee's written request after Lessee receives
a Tax Indemnitee's computations showing the amount of any indemnity payable by
Lessee to such Tax Indemnitee pursuant to this Section 4.02 or any amount
payable by any Tax Indemnitee to Lessee pursuant to this Section 4.02, such
computations shall be subject to confidential verification in writing by any
nationally recognized firm of certified public accountants selected by Lessee
and reasonably acceptable to such Tax Indemnitee. The accounting firm shall
complete its review within thirty (30) days of Lessee's receipt of such Tax
Indemnitee's computations. The computations of such accounting firm shall (i) be
delivered simultaneously to Lessee and such Tax Indemnitee and (ii) absent
manifest error, be final, binding and conclusive upon Lessee and such Tax
Indemnitee. If Lessee pays such indemnity in whole or in part before completion
of the verification procedure, appropriate adjustments will be made promptly
after completion of the verification procedure (and nothing in this Subsection
4.02(i) shall be construed as changing the time when any such indemnity is
payable under this Section 4.02) to take into account any redetermination of the
indemnity by the accounting firm. The fee and disbursements of such firm shall
be paid by Lessee unless such verification shall disclose an error in favor of
such Tax Indemnitee exceeding the lesser of five percent (5%) of the original
claim or $10,000, in which case such fee and disbursements shall be paid by such
Tax Indemnitee. Such Tax Indemnitee shall cooperate with such accounting firm
and (subject to such accounting firm's execution of a confidentiality agreement
satisfactory to such Tax Indemnitee) shall supply such accounting firm with all
information reasonably necessary to permit such review and determination. The
sole responsibility of such accounting firm shall be to verify the computations
of amounts payable hereunder and the interpretation of this Agreement shall not
be within the scope of such accounting firm's responsibilities.
(j) Interest. Lessee will pay as Supplement Rent to each Tax
Indemnitee, on demand, to the extent permitted by applicable law, interest at
the Past Due Rate on the amount of any indemnity not paid when due pursuant to
this Section 4.02, until it is paid. A Tax Indemnitee will pay to Lessee, on
demand, to the extent permitted by applicable law, interest at the Past Due Rate
on the amounts of any payment or reimbursement required hereunder to be made by
such Tax Indemnitee to Lessee not paid when due pursuant to this Section 4.02
until it is paid.
(k) Non-Parties. If a Tax Indemnitee is not a party to this
Agreement, Lessee may require the Tax Indemnitee to agree to the terms of this
Section 4.02 prior to making any payment to such Tax Indemnitee under this
Section 4.02.
(l) Forms, etc. Each Tax Indemnitee agrees to furnish to Lessee from
time to time such duly executed and properly completed forms that may be
necessary or appropriate in order to claim any applicable reduction of or
exemption from, any withholding tax imposed by any Taxing Authority in respect
of any payments otherwise required to be made by Lessee pursuant to the
Operative Documents.
(m) Indemnification for Withholding Taxes on Payments on Equipment
Notes or Pass Through Certificates. Notwithstanding the exclusions set forth in
Subsection 4.02(b) hereof, Lessee shall indemnify and hold harmless on an
After-Tax Basis Owner Participant or, if applicable, Owner Trustee for any U.S.
withholding Taxes (and any interest and penalties with respect thereto) imposed
with respect to a Noteholder or the holder of a Pass Through Certificate, as the
case may be, that result from the failure of a Pass Through Trustee or Loan
Trustee to properly withhold such Taxes. To the extent that Lessee is not
otherwise reimbursed for such amounts, Lessee shall be entitled to recover any
amounts paid pursuant to the preceding sentence from Pass Through Trustee or
Loan Trustee, as the case may be, in its individual capacity (plus interest
thereon at the Debt Rate for Series G-1 Equipment Notes until such amounts have
been recovered in full by Lessee). In no event, however, shall such payment be
made out of, or be indemnifiable from, the assets held by Pass Through Trustee
or Loan Trustee on behalf of the holders of the Pass Through Certificates or the
Equipment Notes, as the case may be. If Loan Trustee or Pass Through Trustee is
required to pay any amount in its individual capacity hereunder, it shall have
no recourse to or right of reimbursement from, the Indenture Estate, any Pass
Through Trust, the Trust Estate, or any portion of either.
Section 4.03 General Indemnity. (a) Claims Defined. For the purposes
of this Section 4.03, "Claims" means any and all liabilities, obligations,
losses, damages, penalties, claims, actions, suits, costs or expenses of
whatsoever kind and nature (whether or not on the basis of negligence, strict or
absolute liability or liability in tort) that may be imposed on, incurred by,
suffered by or asserted against an Indemnitee, as defined below, and, except as
otherwise expressly provided in this Section 4.03, includes all reasonable
out-of-pocket costs, disbursements and expenses (including reasonable
out-of-pocket legal fees and expenses) actually incurred by an Indemnitee in
connection therewith or related thereto.
(b) Indemnitee Defined. For the purposes of this Section 4.03,
"Indemnitee" means (i) Owner Trustee, in its individual capacity and as trustee
under the Trust Agreement, (ii) Owner Participant, (iii) State Street and Loan
Trustee, (iv) so long as it holds any Equipment Notes as agent and trustee of
any Pass Through Trustee, Subordination Agent, (v) so long as it is the holder
of any Equipment Notes, each Pass Through Trustee, (vi) Liquidity Provider and
Policy Provider and (vii) each of their respective successors and permitted
assigns in such capacities, agents, servants, officers, employees and directors
(the respective agents, servants, officers, employees and directors of each of
the foregoing Indemnitees, as applicable, together with such Indemnitee, being
collectively the "Related Indemnitee Group" of such Indemnitee); provided that
such Persons, to the extent they are not signatories to this Agreement, have
expressly agreed in writing to be bound by the terms of this Section 4.03 prior
to, or concurrently with, the making of a Claim. If any Indemnitee fails to
comply with any duty or obligation under this Section 4.03 with respect to any
Claim, such Indemnitee shall not be entitled to any indemnity with respect to
such Claim under this Section 4.03 to the extent such failure was prejudicial to
Lessee. No holder of a Pass Through Certificate in its capacity as such holder
shall be an Indemnitee.
(c) Claims Indemnified. Subject to the exclusions stated in
Subsection 4.03(d), Lessee agrees to indemnify, protect, defend and hold
harmless on an After-Tax Basis each Indemnitee against Claims resulting from or
arising out of (i) any of the Operative Documents or the Original Documents or
the enforcement of any of the terms thereof or any amendment, modification or
waiver in respect thereof and, only in the case of an Indemnitee which is Owner
Participant or Owner Trustee, the Intercreditor Agreement, the Liquidity
Facilities and the Pass Through Trust Agreements or (ii) the Aircraft, the
Airframe, or any Engine or any Part, or any interest therein, whether or not
arising out of the sale, purchase, acceptance, non-acceptance or rejection of
the Aircraft under the Purchase Agreement or the ownership, possession, use,
non-use, substitution, airworthiness, control, maintenance, repair, operation,
registration, re-registration, condition, sale, lease, sublease, storage,
modification, alteration, return, transfer or other disposition of the Aircraft,
the Airframe, any Engine or any Part (including, without limitation, latent or
other defects, whether or not discoverable, and any claim for patent, trademark
or copyright infringement) by Lessee, any Permitted Sublessee or any other
Person. The foregoing indemnity shall not extend to any Claim to the extent that
such Claim is not caused by, or does not arise out of, an act, omission or event
which occurs prior to the termination of the Lease and the payment of all other
payments then due and required to be paid by Lessee under the Operative
Documents. Without limiting the foregoing, Lessee agrees to pay the reasonable
fees and expenses actually incurred of Loan Trustee and Owner Trustee for acting
as such, other than such fees and expenses which constitute Transaction
Expenses.
(d) Claims Excluded. The following are excluded from Lessee's
agreement to indemnify an Indemnitee under this Section 4.03:
(i) Except to the extent fairly attributable to acts or events
occurring prior thereto, any Claim to the extent such Claim is
attributable to acts or events occurring after the earlier of (x) the
return of possession of the Aircraft to Owner Trustee or its designee
pursuant to the terms of the Lease, or (y) the termination of the Lease in
accordance with Section 9 or Section 19 thereof;
(ii) any Claim to the extent such Claim is, or is attributable to, a
Tax or related to the Tax Indemnity Agreement;
(iii) any Claim to the extent such Claim is attributable to the
negligence or willful misconduct of such Indemnitee or such Indemnitee's
Related Indemnitee Group (other than negligence imputed to such Indemnitee
(or such Indemnitee's Related Indenture Group) solely by reason of its
interest in the Aircraft);
(iv) any Claim to the extent such Claim is attributable to the
noncompliance by such Indemnitee or such Indemnitee's Related Indemnitee
Group with any of the terms of, or any misrepresentation by an Indemnitee
or its Related Indemnitee Group contained in, this Agreement, any other
Operative Document, any Original Document or any Pass Through Document to
which such Indemnitee or any of such Related Indemnitee Group is a party
or any agreement relating hereto or thereto;
(v) any Claim to the extent such Claim constitutes a Permitted Lien
attributable to such Indemnitee;
(vi) any Claim to the extent such Claim is attributable to the
offer, sale, assignment, transfer, participation or other disposition
(whether voluntary or involuntary) by or on behalf of such Indemnitee or
its Related Indemnitee Group (other than, in the case of Owner Trustee, as
contemplated by the Lease, and other than during the occurrence and
continuance of an Event of Default, provided that any such offer, sale,
assignment, transfer, participation or other disposition during the
occurrence and continuation of an Event of Default shall not be subject to
indemnification unless it is made in accordance with the Operative
Documents and applicable law) of any Equipment Note or Pass Through
Certificate, all or any part of such Indemnitee's interest in the
Operative Documents or the Pass Through Documents or any interest in the
Indenture Estate or any similar security;
(vii) any Claim to the extent such Claim is attributable to (A) a
failure on the part of Loan Trustee to distribute in accordance with this
Agreement or the Indenture any amounts received and distributable by it
hereunder or thereunder, (B) a failure on the part of Subordination Agent
to distribute in accordance with the Intercreditor Agreement any amounts
received and distributable by it thereunder, (C) a failure on the part of
any Pass Through Trustee to distribute in accordance with the Pass Through
Trust Agreement to which it is a party any amounts received and
distributable by it thereunder or (D) a failure on the part of Owner
Trustee to distribute in accordance with the Trust Agreement any amounts
received and distributable by it thereunder;
(viii)any Claim to the extent such Claim is attributable to the
authorization or giving or withholding of any future amendments,
supplements, waivers or consents with respect to any Operative Document or
any Pass Through Document, other than such as have been requested by
Lessee or that occur as the result of an Event of Default, or such as are
expressly required or contemplated by the provisions of the Operative
Documents or the Pass Through Documents;
(ix) any Claim to the extent such Claim is payable or borne by (a)
Lessee pursuant to any indemnification, compensation or reimbursement
provision of any other Operative Document or any Pass Through Document or
(b) a Person other than Lessee pursuant to any provision of any Operative
Document or any Pass Through Document;
(x) any Claim to the extent such Claim is an ordinary and usual
operating or overhead expense or not an out-of-pocket expense actually
incurred;
(xi) any Claim to the extent such Claim is incurred on account of or
asserted as a result of any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code;
(xii) any Claim to the extent such Claim is attributable to one or
more of the other aircraft financed through the offering of Pass Through
Certificates (in the event of doubt, any Claim shall be allocated between
the Aircraft and such other aircraft in the same proportion that the then
outstanding Equipment Notes bear to the then outstanding equipment notes
issued with respect to the other aircraft and held by Pass Through
Trustees);
(xiii)any Claim by an Indemnitee related to the status of such
Indemnitee as a passenger or shipper on any of Lessee's aircraft or as a
party to a marketing or promotional or other commercial agreement with
Lessee;
(xiv) any Claim to the extent such Claim is attributable to the
offer or sale of any interest in the Trust Estate or the Trust Agreement
or any similar interest other than during the occurrence and continuation
of an Event of Default; and
(xv) any Claim by an Indemnitee related to the status of such
Indemnitee or such Indemnitee's Related Indemnitee Group being a
manufacturer of the Airframe, any Engine or Part.
(e) Insured Claims. In the case of any Claim indemnified by Lessee
hereunder that is covered by a policy of insurance maintained by Lessee, each
Indemnitee agrees to cooperate, at Lessee's expense, with the insurers in the
exercise of their rights to investigate, defend and compromise such Claim.
(f) Claims Procedure. An Indemnitee shall promptly notify Lessee of
any Claim as to which indemnification is sought. The failure to provide such
prompt notice shall not release Lessee from any of its obligations to indemnify
hereunder except to the extent that Lessee is prejudiced by such failure or
Lessee's indemnification obligations are increased as a result of such failure.
Such Indemnitee shall promptly submit to Lessee all additional information in
such Indemnitee's possession to substantiate such Claim as Lessee reasonably
requests. Subject to the rights of Lessee's insurers, Lessee may, at its sole
cost and expense, investigate any Claim, and may in its sole discretion defend
or compromise any Claim. At Lessee's expense, any Indemnitee shall cooperate
with all reasonable requests of Lessee in connection therewith. Such Indemnitee
shall not enter into a settlement or other compromise with respect to any Claim
without the prior written consent of Lessee, which consent shall not be
unreasonably withheld or delayed, unless such Indemnitee waives its right to be
indemnified with respect to such Claim. Where Lessee or its insurers undertake
the defense of an Indemnitee with respect to a Claim, no additional legal fees
or expenses of such Indemnitee in connection with the defense of such Claim
shall be indemnified hereunder unless such fees or expenses were incurred at the
written request of Lessee or such insurers. Subject to the requirements of any
policy of insurance, an Indemnitee may participate at its own expense in any
judicial proceeding controlled by Lessee pursuant to the preceding provisions;
provided that such party's participation does not, in the opinion of counsel
appointed by Lessee or its insurers to conduct such proceedings, interfere with
such control. Such participation shall not constitute a waiver of the
indemnification provided in this Section 4.03. Notwithstanding anything to the
contrary contained herein, Lessee shall not under any circumstances be liable
for the fees and expenses of more than one counsel for all Indemnitees with
respect to any one Claim.
(g) Subrogation. To the extent that a Claim is in fact paid in full
by Lessee or its insurer, Lessee or such insurer (as the case may be) shall,
without any further action, be subrogated to the rights and remedies of the
Indemnitee on whose behalf such Claim was paid with respect to the transaction
or event giving rise to such Claim. Such Indemnitee shall give such further
assurances or agreements and shall cooperate with Lessee or such insurer, as the
case may be, to permit Lessee or such insurer to pursue such rights and
remedies, if any, to the extent reasonably requested by Lessee. So long as no
Event of Default has occurred and is continuing, if an Indemnitee receives any
payment, in whole or in part, from any party other than Lessee or its insurers
with respect to any Claim paid by Lessee or its insurers, it shall promptly pay
over to Lessee the amount received (but not an amount in excess of the amount
Lessee or any of its insurers has paid in respect of such Claim). Any amount
referred to in the preceding sentence that is payable to Lessee shall not be
paid to Lessee, or, if it has been previously paid directly to Lessee, shall not
be retained by Lessee, if at the time of such payment an Event of Default has
occurred and is continuing, but shall be paid to and held by Loan Trustee as
security for the obligations of Lessee under the Operative Documents. If Lessee
agrees, such amount payable shall be applied against Lessee's obligations
thereunder when and as they become due and payable. At such time as such Event
of Default is no longer continuing, such amount, to the extent not previously so
applied against Lessee's obligations, shall be paid to Lessee. If any such
amount has been so held by Loan Trustee as security for more than 90 days after
any such Event of Default has occurred, during which period (i) Owner Trustee or
Loan Trustee was not limited by operation of law or otherwise from exercising
remedies under the Lease and (ii) Owner Trustee or Loan Trustee did not exercise
any remedy available to it under Section 15 of the Lease, then any remaining
such amount shall be paid to Lessee.
(h) No Guaranty. Nothing set forth in this Section 4.03 constitutes
a guarantee by Lessee of payments due pursuant to the Equipment Notes or that
the Aircraft at any time will have any particular value, useful life or residual
value.
(i) Payments; Interest. Any amount payable to any Indemnitee on
account of a Claim shall be paid within 30 days after receipt by Lessee of a
written demand therefor from such Indemnitee accompanied by a written statement
describing in reasonable detail the Claims that are the subject of and basis for
such indemnity and the computation of the amount payable. Any payments made
pursuant to this Section 4.03 directly to an Indemnitee or to Lessee, as the
case may be, shall be made in immediately available funds at such bank or to
such account as is specified by the payee in written directions to the payor or,
if no such directions are given, by check of the payor payable to the order of
the payee and mailed to the payee by certified mail, return receipt requested,
postage prepaid to its address referred to in Section 16.01. To the extent
permitted by applicable law, interest at the Past Due Rate shall be paid, on
demand, on any amount or indemnity not paid when due pursuant to this Section
4.03 until the same is paid. Such interest shall be paid in the same manner as
the unpaid amount in respect of which such interest is due.
(j) Tax deduction or credit. If, by reason of any Claim payment made
to or for the account of an Indemnitee by Lessee pursuant to this Section 4.03,
such Indemnitee subsequently realizes a tax deduction or credit (including
foreign tax credit and any reduction in Taxes) not previously taken into account
in computing such payment, such Indemnitee shall promptly pay to Lessee, but
only if Lessee has made all payments then due and owing to such Indemnitee under
the Operative Documents, an amount equal to the sum of (1) the actual reduction
in Taxes realized by such Indemnitee which is attributable to such deduction or
credit, and (2) the actual reduction in Taxes realized by such Indemnitee as a
result of any payment made by such Indemnitee pursuant to this sentence.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF OTHER PARTIES
Section 5.01 Representations, Warranties and Covenants of State
Street. State Street, generally, and each of Loan Trustee, Subordination Agent
and Pass Through Trustee as it relates to it, represents, warrants and covenants
that:
(a) State Street is a national banking association duly organized
and validly existing in good standing under the laws of the United States, is
eligible to be Loan Trustee under Section 8.01(a) of the Indenture, will
promptly comply with Section 8.01(a) of the Indenture and has full power,
authority and legal right to enter into and perform its obligations under each
of the Operative Documents and the Pass Through Documents to which State Street,
Loan Trustee, Subordination Agent or any Pass Through Trustee is a party and, in
its capacity as Loan Trustee and Pass Through Trustee, respectively, to
authenticate the Equipment Notes and the Pass Through Certificates,
respectively. State Street is qualified to act as Loan Trustee under Section
8.01(c) of the Indenture.
(b) The execution, delivery and performance by State Street,
individually or in its capacity as Loan Trustee, Subordination Agent or Pass
Through Trustee, as the case may be, of this Agreement, each of the other
Operative Documents and each of the Pass Through Documents to which State
Street, Loan Trustee, Subordination Agent or any Pass Through Trustee is a
party, and the authentication of the Equipment Notes and the Pass Through
Certificates, respectively, to be delivered on the Delivery Date, have been duly
authorized by all necessary action on the part of State Street, Loan Trustee,
Subordination Agent and each Pass Through Trustee, as the case may be, and do
not violate any law or regulation of the United States or of the state of the
United States in which State Street is located and which governs the banking and
trust powers of State Street or any order, writ, judgment or decree of any
court, arbitrator or governmental authority applicable to State Street, Loan
Trustee, Subordination Agent or any Pass Through Trustee or any of their assets,
will not violate any provision of the articles of association or by-laws of
State Street and will not violate any provision of, or constitute a default
under, any mortgage, indenture, contract, agreement or undertaking to which any
of State Street, Loan Trustee, Subordination Agent or any Pass Through Trustee
is a party or by which any of them or their respective properties may be bound
or affected.
(c) Neither the execution and delivery by State Street, individually
or in its capacity as Loan Trustee, Subordination Agent or Pass Through Trustee,
as the case may be, of this Agreement, any other Operative Document or any Pass
Through Document to which State Street, Loan Trustee, Subordination Agent or any
Pass Through Trustee is a party, nor the consummation by State Street, Loan
Trustee, Subordination Agent or any Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the authorization, consent
or approval of, the giving of notice to, the filing or registration with, or the
taking of any other action in respect of, any governmental authority or agency
of the United States or the state of the United States where State Street is
located and regulating the banking and trust powers of State Street.
(d) This Agreement, each other Operative Document and each Pass
Through Document to which State Street, Loan Trustee, Subordination Agent or any
Pass Through Trustee is a party have been duly executed and delivered by State
Street, individually and in its capacity as Loan Trustee, Subordination Agent or
Pass Through Trustee, as the case may be, and constitute the legal, valid and
binding obligations of State Street, Loan Trustee, Subordination Agent and such
Pass Through Trustee, as the case may be, enforceable against it in accordance
with its terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity.
(e) It unconditionally agrees with and for the benefit of the
parties to this Agreement that it will not directly or indirectly create, incur,
assume or suffer to exist any Loan Trustee Lien or Other Party Lien with respect
to the Indenture Estate or the Trust Estate attributable to it, and it agrees
that it will, at its own cost and expense, promptly take such action as may be
necessary to discharge and satisfy in full any such Lien; and it shall
indemnify, protect, defend and hold harmless each Indemnitee and Lessee against
Claims in any way resulting from or arising out of a breach by it of its
obligations under this Section 5.01(e). State Street, in its individual
capacity, agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Indenture Estate or the Trust Estate resulting
from any such Lien.
(f) The Assumed Equipment Notes to be issued to Subordination Agent
pursuant hereto are being acquired by it to be held under the Intercreditor
Agreement.
(g) Each of State Street, Loan Trustee, Subordination Agent and each
Pass Through Trustee agrees that it will not impose any lifting charge, cable
charge, remittance charge or any other charge or fee on any transfer by Lessee
of funds to, through or by State Street, Loan Trustee, Subordination Agent or
such Pass Through Trustee pursuant to this Agreement, any other Operative
Document or any Pass Through Document, except as may be otherwise agreed to in
writing by Lessee.
(h) Each of State Street, Loan Trustee, Subordination Agent and any
Pass Through Trustee agrees to be bound by the terms of Section 10.15 of the
Indenture.
(i) There are no Taxes payable by State Street, Loan Trustee,
Subordination Agent or any Pass Through Trustee imposed by the State of
Connecticut or any political subdivision or taxing authority thereof in
connection with the execution, delivery or performance by State Street, Loan
Trustee, Subordination Agent or any Pass Through Trustee of any Operative
Document or any Pass Through Document (other than franchise or other taxes based
on or measured by any fees or compensation received by any such Person for
services rendered in connection with the transactions contemplated by the
Operative Documents or the Pass Through Documents), and there are no Taxes
payable by any Pass Through Trustee imposed by the State of Connecticut or any
political subdivision thereof in connection with the acquisition, possession or
ownership by such Pass Through Trustee of any of the Equipment Notes (other than
franchise or other taxes based on or measured by any fees or compensation
received by such Pass Through Trustee for services rendered in connection with
the transactions contemplated by the Operative Documents or the Pass Through
Documents) and, assuming that the Pass Through Trusts will not be taxable for
Federal income tax purposes as corporations, but, rather, will be characterized
for such purposes as grantor trusts or partnerships, the Pass Through Trusts
will not be subject to any Taxes imposed by the State of Connecticut or any
political subdivision thereof.
(j) Except with the consent of Lessee, which shall not be
unreasonably withheld, State Street will act as Pass Through Trustee solely
through its offices within the State of Connecticut, except for such services
that may be performed for it by various agents, but not directly by it, in other
states.
(k) There are no pending or, to its knowledge, threatened actions or
proceedings against State Street, Loan Trustee, Subordination Agent or any Pass
Through Trustee before any court or administrative agency which individually or
in the aggregate, if determined adversely to it, would materially adversely
affect the ability of State Street, Loan Trustee, Subordination Agent or any
Pass Through Trustee to perform its obligations under any Operative Document or
any Pass Through Document.
(l) The representations and warranties contained in Section 7.15 of
each Pass Through Trust Agreement are true, complete and correct as of the
Delivery Date.
(m) Except for the issue and sale of the Pass Through Certificates,
Pass Through Trustee has not directly or indirectly offered any Equipment Notes
for sale to any Person or solicited any offer to acquire any Equipment Notes
from any Person, nor has Pass Through Trustee authorized anyone to act on its
behalf to offer directly or indirectly any Equipment Notes for sale to any
Person, or to solicit any offer to acquire any Equipment Notes from any Person;
and Pass Through Trustee is not in default under any Pass Through Trust
Agreement.
(n) Pass Through Trustee is not directly or indirectly controlling,
controlled by or under common control with Owner Participant, Owner Trustee, any
Underwriter or Lessee.
Section 5.02 Representations, Warranties and Covenants of Owner
Participant. Owner Participant represents, warrants and covenants that:
(a) It is duly incorporated, validly existing and in good standing
under the laws of [_______] and has the corporate power and authority to carry
on its present business and operations and to own or lease its properties, and
has the corporate power and authority to enter into and to perform its
obligations under the Operative Documents to which it is a party; this Agreement
and the other Operative Documents to which it is a party have been duly
authorized, executed and delivered by it; and this Agreement and each of the
other Operative Documents to which it is a party constitute the legal, valid and
binding obligations of Owner Participant enforceable against it in accordance
with its respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity.
(b) Neither the execution and delivery by Owner Participant of the
Operative Documents to which it is a party nor compliance by it with all of the
provisions thereof, will contravene (x) any law or order of any court or
governmental authority or agency applicable to or binding on Owner Participant
(it being understood that no representation or warranty is made with respect to
laws, rules or regulations relating to aviation or to the nature of the
equipment owned by Owner Trustee other than such laws, rules or regulations
relating to the citizenship requirements of Owner Participant under applicable
law) or (y) the provisions of, or constitutes or has constituted or will
constitute a default under, or result in the creation of any Lien (other than
Liens provided for in the Operative Documents) upon any property of Owner
Participant under, its certificate of incorporation or by-laws or any indenture,
mortgage, contract or other agreement or instrument to which Owner Participant
is a party or by which it or any of its property may be bound or affected.
(c) No authorization or approval or other action by, and no notice
to or filing with any governmental authority or regulatory body (other than as
required by the Transportation Code) is required for the due execution, delivery
or performance by it of the Operative Documents to which it is a party.
(d) There are no pending or, to its knowledge, threatened actions or
proceedings before any court or administrative agency or arbitrator which would
materially adversely affect Owner Participant's ability to perform its
obligations under the Operative Documents to which it is a party.
(e) Neither Owner Participant nor anyone authorized by it to act on
its behalf (it being understood that in proposing, facilitating and otherwise
taking any action in connection with the financing contemplated hereby and
agreed to herein by Owner Participant, Lessee has not acted as agent of Owner
Participant) has directly or indirectly offered any Equipment Note or Pass
Through Certificate or any interest in and to the Trust Estate, the Trust
Agreement or any similar interest for sale to, or solicited any offer to acquire
any of the same from, any Person. Owner Participant's interest in the Trust
Estate and the Trust Agreement is being acquired for its own account and is
being purchased for investment and not with a view to any resale or distribution
thereof.
(f) On the Delivery Date, the Trust Estate will be free of Lessor
Liens (including for this purpose Liens which would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to Owner Participant.
(g) It is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangement).
(h) It has a tangible net worth (exclusive of goodwill) greater than
$50,000,000, as determined in accordance with generally accepted accounting
principles.
(i) Owner Participant covenants and agrees that if (i) Lessee has
elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by
causing the Aircraft to be sold pursuant to Section 9(b) of the Lease and (ii)
Owner Trustee has, pursuant to Section 9(b) of the Lease, given to Lessee
written notice of Owner Trustee's election to retain title to the Aircraft and
(iii) Owner Trustee has failed to make, on or before the Termination Date, any
payment required to be made by Owner Trustee pursuant to Section 9(b) of the
Lease in connection with its retention of title to the Aircraft, Owner
Participant will indemnify Lessee for any losses, damages, costs or expenses of
any kind (including any additional rents paid by Lessee and any fees and
expenses of lawyers, appraisers, brokers or accountants) incurred as a
consequence of such failure by Owner Trustee. Owner Participant further
covenants and agrees to pay those costs and expenses specified to be paid by
Owner Participant pursuant to Exhibit E to the Lease.
(j) Section 3 of the Lease contemplates that, under certain
circumstances, Owner Participant will make certain recalculations of Basic Rent
percentages and allocations, the Special Purchase Price, Stipulated Loss Value
percentages and Termination Value percentages, and Owner Participant hereby
agrees to make such recalculations as and when contemplated by the Lease and
subject to all the terms and conditions of the Lease and promptly to take such
further actions as may be necessary or desirable to give effect to and to cause
Owner Trustee to give effect to the provisions of Section 3 of the Lease.
Section 5.03 Representations, Warranties and Covenants of Owner
Trustee. Owner Trustee, in its individual capacity (except as provided in
clauses (c) and (g) below) and (but only as provided in clauses (c) and (g) and,
to the extent that it relates to Owner Trustee, clauses (b), (i) and (k) below)
as Owner Trustee, represents, warrants and covenants that:
(a) Owner Trustee, in its individual capacity, is a national banking
association duly organized and validly existing in good standing under the laws
of the United States, has full corporate power and authority to carry on its
business as now conducted, has the corporate power and authority to execute and
deliver the Trust Agreement, has the corporate power and authority to carry out
the terms of the Trust Agreement, and has (assuming the authorization, execution
and delivery of the Trust Agreement by Owner Participant), as Owner Trustee, and
to the extent expressly provided herein or therein, in its individual capacity,
the corporate power and authority to execute and deliver and to carry out the
terms of this Agreement, the Indenture, the Equipment Notes, the Lease and each
other Operative Document to which it is a party.
(b) Owner Trustee in its trust capacity and, to the extent expressly
provided herein, in its individual capacity, has duly authorized, executed and
delivered this Agreement, in its individual capacity, has duly authorized,
executed and delivered the Trust Agreement and in its trust capacity, except as
expressly provided therein, has duly authorized, executed and delivered the
other Operative Documents to which it is a party and (assuming the
authorization, execution and delivery of the Trust Agreement by Owner
Participant) this Agreement and each of the other Operative Documents to which
it is a party constitute the legal, valid and binding obligations of Owner
Trustee, in its individual capacity or as Owner Trustee, as the case may be,
enforceable against it in its individual capacity or as Owner Trustee, as the
case may be, in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity. On the Delivery Date,
Owner Trustee shall have received whatever title to the Aircraft as was conveyed
to it by Lessee.
(c) Assuming the due authorization, execution and delivery of the
Trust Agreement by Owner Participant, Owner Trustee has duly authorized, and on
the Delivery Date shall have duly issued, executed and delivered to Loan Trustee
for authentication, the Equipment Notes pursuant to the terms and provisions
hereof and of the Indenture, and each Equipment Note on the Delivery Date will
constitute the valid and binding obligation of Owner Trustee and will be
entitled to the benefits and security afforded by the Indenture in accordance
with the terms of such Equipment Note and the Indenture.
(d) Neither the execution and delivery by Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, of any of the
Operative Documents to which Owner Trustee is a party, nor the consummation by
Owner Trustee of any of the transactions contemplated thereby, nor the
compliance by Owner Trustee, in its individual capacity or as Owner Trustee, as
the case may be, with the terms and provisions thereof, (i) requires or will
require any approval of its stockholders, or approval or consent of any trustees
or holders of any indebtedness or obligations of it or (ii) violates or will
violate its articles of association or by-laws, or contravenes or will
contravene any provision of, or constitutes or will constitute a default under,
or results or will result in any breach of, or results or will result in the
creation of any Lien (other than as permitted under the Operative Documents)
upon its property under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit agreement, license or
other agreement or instrument to which it is a party or by which it is bound, or
contravenes or will contravene any law, governmental rule or regulation of the
United States of America or the State of Utah governing the trust powers of
Owner Trustee, or any judgment or order applicable to or binding on it.
(e) No consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in respect of,
any Utah state or local governmental authority or agency or any United States
federal governmental authority or agency regulating the trust powers of Owner
Trustee in its individual capacity is required for the execution and delivery
of, or the carrying out by, Owner Trustee, in its individual capacity or as
Owner Trustee, as the case may be, of any of the transactions contemplated by
the Trust Agreement, this Agreement, the Amended and Restated Indenture, the
Lease or the Equipment Notes, or any other Operative Document to which it is a
party or by which it is bound, other than any such consent, approval, order,
authorization, registration, notice or action as has been duly obtained, given
or taken or which is described in Subsection 4.01(e).
(f) There exists no Lessor Lien (including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of Lessor
Liens) attributable to Owner Trustee, in its individual capacity.
(g) There exists no Lessor Lien (including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of Lessor
Liens) attributable to Owner Trustee, as lessor under the Lease.
(h) There are no Taxes payable by Owner Trustee, either in its
individual capacity or as Owner Trustee, imposed by the State of Utah or any
political subdivision thereof in connection with the issuance of the Equipment
Notes, or the execution and delivery in its individual capacity or as Owner
Trustee, as the case may be, of any of the instruments referred to in clauses
(a), (b), (c) and (d) above, that, in each case, would not have been imposed if
the Trust Estate were not located in the State of Utah and Wells Fargo Bank
Northwest, National Association had not (i) had its principal place of business
in, (ii) performed (in its individual capacity or as Owner Trustee) any or all
of its duties under the Operative Documents in, and (iii) engaged in any
activities unrelated to the transactions contemplated by the Operative Documents
in, the State of Utah.
(i) There are no pending or, to its knowledge, threatened actions or
proceedings against Owner Trustee, either in its individual capacity or as Owner
Trustee, before any court or administrative agency, which, if determined
adversely to it, would materially adversely affect the ability of Owner Trustee,
in its individual capacity or as Owner Trustee, as the case may be, to perform
its obligations under any of the instruments referred to in clauses (a), (b),
(c) and (d) above.
(j) Its chief executive office and principal place of business, and
the place where its records concerning the Aircraft and all its interests in, to
and under all documents relating to the Trust Estate, are located in Salt Lake
City, Utah. Wells Fargo Bank Northwest, National Association, in its individual
capacity, agrees that it will not change the location of such office to a
location outside of Salt Lake City, Utah, without prior written notice to all
parties hereto.
(k) Owner Trustee has not, in its individual capacity or as Owner
Trustee, directly or indirectly offered any Equipment Note or Pass Through
Certificate or any interest in or to the Trust Estate, the Trust Agreement or
any similar interest for sale to, or solicited any offer to acquire any of the
same from, anyone other than Pass Through Trustees and Owner Participant, and no
officer or responsible employee of the Corporate Trust Department of Wells Fargo
Bank Northwest, National Association has knowledge of any such offer or
solicitation by anyone other than Lessee. Owner Trustee has not authorized
anyone to act on its behalf (it being understood that in arranging and proposing
the financing contemplated hereby and agreed to herein by Owner Trustee, Lessee
has not acted as agent of Owner Trustee) to offer directly or indirectly any
Equipment Note, any Pass Through Certificate or any interest in and to the Trust
Estate, the Trust Agreement or any similar interest for sale to, or to solicit
any offer to acquire any of the same from, any Person.
(l) It is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangements).
(m) There has not occurred any event which constitutes (or, to the
best of its knowledge would, with the passing of time or the giving of notice or
both, constitute) an Event of Default as defined in the Indenture which has been
caused by or relates to Owner Trustee, in its individual capacity, and which is
presently continuing.
(n) On the Delivery Date Owner Trustee shall receive whatever title
to the Aircraft as is conveyed to it by Lessee.
(o) Owner Trustee agrees to furnish to Lessee copies of all periodic
reports sent by it to the FAA (or to the aeronautical authority of the country
of registry of the Aircraft if the Aircraft is not registered under the laws of
the United States) relating to the Aircraft, notices and other correspondence
received by it from the FAA (or from the aeronautical authority of the country
of registry of the Aircraft if the Aircraft is not registered under the laws of
the United States) relating to the Aircraft and any other documents, affidavits
or instruments relating to the Aircraft or the Owner Trustee's ownership thereof
in its possession after the date hereof.
Section 5.04 Representations, Warranties and Covenants of
Noteholders. Each of Noteholders, by acceptance of its Equipment Note,
represents, warrants and covenants that:
(a) Neither it nor anyone acting in its behalf has offered any
Equipment Note for sale to, or solicited any offer to buy any Equipment Note
from, any Person other than in a manner in compliance with, and which does not
require registration under, the Securities Act of 1933, as amended, or the rules
and regulations thereunder.
(b) The Equipment Note to be issued to such Noteholder pursuant to
the Indenture is being acquired by such Noteholder for investment and not with a
view to resale or distribution (it being understood that such Noteholder may
pledge or assign as security its interest in each Equipment Note issued to it ),
provided that the disposition of its property shall at all times be and remain
within its control, except that such Noteholder may sell, transfer or otherwise
dispose of any Equipment Note or any portion thereof, or grant participations
therein, in a manner which in itself does not require registration under the
Securities Action of 1933, as amended.
(c) It shall not transfer any interest in any Equipment Note unless
and until the transferee agrees in writing (copies of which shall be provided by
Loan Trustee to Lessee, Owner Participant and Owner Trustee) to make the
representations and warranties contemplated to be made by a Noteholder in this
Agreement and to be bound by the terms of this Agreement and the Indenture
(including, without limitation, the representations, warranties and covenants
set forth in this Section 5.04 (including this Subsection (c)), in Subsections
6.01(a), 6.01(b) and 6.01(c), in Section 11.01, and in Sections 2.18, 2.19 and
4.03 of the Indenture.
ARTICLE 6
OTHER COVENANTS AND AGREEMENTS
Section 6.01 Other Agreements. (a) Each of State Street, Loan
Trustee, Subordination Agent, Owner Trustee, Owner Participant, each Pass
Through Trustee and any other Noteholder agrees that, unless an Event of Default
shall have occurred and be continuing, it shall not take any action contrary to,
or otherwise in any way interfere with or disturb (and then only in accordance
with the Lease), the quiet enjoyment of the use and possession of the Aircraft,
the Airframe, any Engine or any Part by Lessee or any transferee of any interest
in any thereof permitted under the Lease.
(b) Each Noteholder, including, without limitation, Subordination
Agent and each Pass Through Trustee, unconditionally agrees with and for the
benefit of the parties to this Agreement that it will not directly or indirectly
create, incur, assume or suffer to exist any Noteholder Liens with respect to
the Aircraft or any portion of the Trust Estate, and such Noteholder agrees that
it will, at its own cost and expense, promptly take such action as may be
necessary to discharge and satisfy in full any such Noteholder Lien; and each
Noteholder hereby agrees to indemnify, protect, defend and hold harmless each
Indemnitee and Lessee against Claims in any way resulting from or arising out of
a breach by it of its obligations under this Subsection 6.01(b). Each Noteholder
further agrees to make restitution to the Trust Estate for any actual diminution
of the assets of the Trust Estate resulting from such Noteholder Lien.
(c) By its acceptance of its Equipment Notes, each Noteholder (i)
unconditionally agrees for the benefit of Lessee and Loan Trustee to be bound by
and to perform and comply with all of the terms of such Equipment Notes, the
Indenture and this Agreement applicable to such Noteholder and (ii) agrees that
it will not transfer any Equipment Note (or any part thereof) to any entity
unless such entity makes (or is deemed to have made) a representation and
warranty as of the date of transfer that either no part of the funds to be used
by it for the purchase and holding of such Equipment Note (or any part thereof)
constitutes assets of any "employee benefit plan" or that such purchase and
holding will not result in a non-exempt prohibited transaction under Section
4975 of the Code and Section 406 of ERISA.
(d) Each of Lessee, Owner Trustee, Owner Participant, Loan Trustee,
each Pass Through Trustee and Subordination Agent covenants that (i) until one
year and one day after the Series G-1 Equipment Notes have been paid in full, it
shall not acquiesce, petition or otherwise invoke or cause or join in invoking
or causing the Class G-1 Pass Through Trust or any other Person to invoke the
process of any governmental authority for the purpose of commencing or
sustaining a case (whether voluntary or not) against the Class G-1 Pass Through
Trust under any bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Class G-1 Pass Through Trust or any substantial part of its property or
ordering the winding-up or liquidation of the affairs of the Class G Pass
Through Trust, (ii) until one year and one day after the Series G-2 Equipment
Notes have been paid in full, it shall not acquiesce, petition or otherwise
invoke or cause or join in invoking or causing the Class G-2 Pass Through Trust
or any other Person to invoke the process of any governmental authority for the
purpose of commencing or sustaining a case (whether voluntary or not) against
the Class G-2 Pass Through Trust under any bankruptcy, insolvency or similar law
or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Class G-2 Pass Through Trust or any substantial
part of its property or ordering the winding-up or liquidation of the affairs of
the Class G-2 Pass Through Trust, and (iii) until one year and one day after the
Series C Equipment Notes have been paid in full, it shall not acquiesce,
petition or otherwise invoke or cause or join in invoking or causing the Class C
Pass Through Trust or any other Person to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case (whether voluntary
or not) against the Class C Pass Through Trust under any bankruptcy, insolvency
or similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Class C Pass Through
Trust or any substantial part of its property or ordering the winding-up or
liquidation of the affairs of the Class C Pass Through Trust.
(e) Each of Owner Participant and Wells Fargo Bank Northwest,
National Association, in its individual capacity, represents and warrants to the
other parties to this Agreement that it is, and on the Delivery Date will be, a
Citizen of the United States without making use of any voting trust, voting
powers agreement or similar arrangement. Owner Participant agrees, solely for
the benefit of Lessee and Noteholders, that if (i) it shall cease to be, or
believes itself likely to cease to be, a Citizen of the United States and (ii)
the Aircraft shall or would therefore become ineligible for registration in the
name of Owner Trustee under the Transportation Code and regulations then
applicable thereunder, then Owner Participant shall (at its own expense and
without any reimbursement or indemnification from Lessee) promptly effect a
voting trust, voting powers agreement or other similar arrangement or take any
other action as may be necessary to prevent any deregistration and to maintain
the United States registration of the Aircraft. Owner Participant shall be
liable to pay on request to each of the other parties hereto and to each holder
of an Equipment Note compensation for any damages suffered by any such other
party or holder as the result of the representation and warranty of Owner
Participant in the first sentence of this Subsection 6.01(e) being untrue as of
the Delivery Date. Owner Participant shall be liable to pay on request to
Lessee, any Permitted Sublessee and Noteholders compensation for any damages
which may be incurred by Lessee, any Permitted Sublessee or Noteholders as a
result of Owner Participant's failure to comply with its obligations pursuant to
the second sentence of this Subsection 6.01(e). Each party hereto agrees, upon
the request and at the sole expense of Owner Participant, to cooperate with
Owner Participant in complying with its obligations under the provisions of the
second sentence of this Subsection 6.01(e). Wells Fargo Bank Northwest, National
Association, in its individual capacity, agrees that if at any time an officer
or responsible employee of the Corporate Trust Department of Wells Fargo Bank
Northwest, National Association, obtains actual knowledge that Wells Fargo Bank
Northwest, National Association, has ceased to be a Citizen of the United States
without making use of a voting trust, voting powers agreement or similar
arrangement, it will promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Transportation Code as in effect at such time
or, if it is not necessary, if and so long as Owner Trustee's citizenship would
have any adverse effect on Noteholders, Lessee or Owner Participant), effective
upon the appointment of a successor Owner Trustee in accordance with Section
9.01 of the Trust Agreement. Owner Trustee in its individual capacity shall bear
all costs and expenses incurred in connection with such resignation or transfer,
provided that such cessation of citizenship was not caused by Owner Participant.
If Owner Participant or Wells Fargo Bank Northwest, National Association, in its
individual capacity, does not comply with the requirements of this Subsection
6.01(e), Owner Trustee, Loan Trustee and Noteholders hereby agree that an Event
of Default (or an event which would constitute an Event of Default but for lapse
of time or the giving of notice or both) shall not have occurred and be
continuing under the Lease due to non-compliance by Lessee with the registration
requirements in the Lease.
(f) Loan Trustee, Noteholders, Owner Trustee, Owner Participant,
Subordination Agent and each Pass Through Trustee agree to execute and deliver,
at Lessee's expense, all such documents as Owner Trustee or Lessee reasonably
requests for the purpose of continuing the registration of the Aircraft at the
FAA in Owner Trustee's name. Loan Trustee, Noteholders, Owner Trustee, Owner
Participant, Subordination Agent and each Pass Through Trustee agree that
Lessee, 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
Sublessee could be principally based, in the name of Owner Trustee, 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 and Owner Participant (i) if such jurisdiction is at the time of
registration listed on Exhibit I, Loan Trustee and Owner Participant shall have
received at the time of such registration an opinion of counsel to Lessee to the
effect that (A) the Lease and Owner Trustee's right to repossession under the
Lease is valid and enforceable under the laws of such country, (B) after giving
effect to such change in registration, the Lien of the Indenture shall continue
as a valid Lien and shall be duly perfected in the new jurisdiction of
registration and that all filing, recording or other action necessary to perfect
and protect the Lien of the 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 Owner
Participant shall have received a certificate from a Responsible Officer of
Lessee that all possible preparations to accomplish such filing, recording and
other action shall have been done, and such filing, recording and other action
shall be accomplished and a supplemental opinion to that effect shall be
promptly delivered to Loan Trustee and Owner Participant subsequent to the
effective date of such change in registration), (C) the obligations of Lessee
under the Lease shall remain valid, binding and (subject to customary bankruptcy
and equitable remedies exceptions and to other exceptions customary in foreign
opinions generally) enforceable under the laws of such jurisdiction (or the laws
of the jurisdiction to which the laws of such jurisdiction would refer as the
applicable governing law) and (D) all approvals or consents of any government in
such jurisdiction having jurisdiction required for such change in registration
shall have been duly obtained and shall be in full force and effect, and (ii) if
such jurisdiction is at the time of registration not listed on Exhibit I, Loan
Trustee and Owner Participant 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 Lessee to the effect that (A) the terms of the Lease 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 15 of the Lease do not in the opinion of such
counsel make the remedies provided in Section 15 of the Lease inadequate for the
practical realization of the rights and benefits provided thereby), (B) that it
is not necessary, solely as a consequence of such change in registration and
without giving effect to any other activity of Owner Trustee, Owner Participant
or Loan Trustee (or any affiliate thereof), as the case may be, for Owner
Trustee, Owner Participant or Loan Trustee to register or qualify to do business
in such jurisdiction, (C) that there is no tort liability of the owner of an
aircraft not in possession thereof under the laws of such jurisdiction other
than tort liability that might have been imposed on such owner 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 Owner Participant is
provided, at Lessee's expense, to cover such risk) and (D) (unless Lessee shall
have agreed to provide insurance covering the risk of requisition of use or
title of the Aircraft by the government of such jurisdiction so long as the
Aircraft is registered under the laws of such jurisdiction) that the laws of
such jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into Dollars for the loss of
use or title of the Aircraft in the event of requisition by such government of
such use or title. Owner Trustee, Owner Participant and Loan Trustee will
cooperate with Lessee 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:
(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 Owner Participant and a Majority in Interest of Noteholders
consent to such change in registration;
(ii) Loan Trustee, Owner Trustee and Owner Participant shall have
received evidence of compliance with the insurance provisions contained in
the Lease after giving effect to such change in registration; and
(iii) Lessee shall have paid or made provision reasonably
satisfactory to Loan Trustee and Owner Participant for the payment of all
reasonable expenses (including reasonable attorneys' fees) of Loan
Trustee, Owner Trustee, Owner Participant and Noteholders in connection
with such change in registration.
(g) Each of Wells Fargo Bank Northwest, National Association, in its
individual capacity, and Owner Participant covenants and agrees that it shall
not cause or permit to exist a Lessor Lien attributable to it with respect to
the Aircraft or any other portion of the Trust Estate. Each of Wells Fargo Bank
Northwest, National Association, in its individual capacity, and Owner
Participant agrees that it will promptly, at its own expense, take such action
as may be necessary duly to discharge such Lessor Lien attributable to it. Each
of Wells Fargo Bank Northwest, National Association, in its individual capacity,
and Owner Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from Lessor Liens
(including for this purpose Liens which would be Lessor Liens but for the
proviso in the definition of Lessor Liens) attributable to it.
(h) Owner Participant represents and warrants that it is not
acquiring its interest in the Trust Estate or any interests represented thereby
with the assets of any "employee benefit plan" as defined in Section 3(3) of
ERISA or of any "plan" within the meaning of Section 4975(e)(1) of the Code.
Owner Participant agrees that it will not transfer any of its right, title or
interest in and to this Agreement, the Trust Estate or the Trust Agreement or
any proceeds therefrom to any entity unless such entity makes (or is deemed to
have made) a representation and warranty as of the date of transfer that either
no part of the funds to be used by it for the purchase of such right, title and
interest (or any part thereof) constitutes assets of any "employee benefit plan"
or that such transfer will not result in a non-exempt prohibited transaction
(under Section 4975 of the Code and Section 406 of ERISA). Each Pass Through
Trustee agrees that it will not agree to any amendment, modification or waiver
of Section 3.01(g) of the Trust Supplement to any Pass Through Trust Agreement
specified in Schedule II without the prior written consent of Owner Participant.
(i) State Street, Loan Trustee, Noteholders, Owner Trustee (in its
individual capacity and as trustee), Owner Participant, Subordination Agent and
each Pass Through Trustee each agrees that it will not disclose, directly or
indirectly, to any Person not a party hereto or their respective counsel or
advisors any information obtained from Lessee hereunder or in connection
herewith or any portion of any Operative Document not filed with the FAA or
other governmental agency or authority and available for public inspection
("Confidential Information"), and will use all reasonable efforts to have all
such Confidential Information kept confidential and not used in any way known to
such party to be detrimental to Lessee, except that (a) each party may use,
retain and disclose any such Confidential Information to its special counsel and
public accountants, any potential transferees, any affiliate and any
governmental agency or instrumentality or other supervisory body (including bank
regulators) requesting such disclosure or pursuant to its regulatory or
supervisory authority over such party or any affiliate thereof, provided that
such special counsel, public accountants, or potential transferees agree in
advance to keep such Confidential Information confidential, (b) each party may
use, retain and disclose any such Confidential Information that has been
publicly disclosed (other than by such party or any affiliate thereof in breach
of this paragraph) or has rightfully come into the possession of such party or
any affiliate thereof (other than from Lessee) on a nonconfidential basis, (c)
each party may use, retain and disclose any such Confidential Information as
required by law, rule, regulation or any governmental agency, (d) each party may
use, retain and disclose any such Confidential Information where such
Confidential Information was previously known to the subject party free of any
obligation to keep it confidential, (e) each party may use, retain and disclose
any such Confidential Information to third parties in connection with or in
response to any order, decree, judgment, subpoena, notice of discovery or
similar ruling or pleading (provided, that each party shall endeavor in good
faith to prevent the disclosure of such Confidential Information pursuant to any
such order, decree, judgment, subpoena, notice of discovery or similar ruling or
pleading) or as part of its normal reporting or review procedure to its
auditors, regulators, parent company or affiliates, and (f) each party may use,
retain and disclose any such Confidential Information to the extent necessary to
obtain appropriate insurance or in order to enforce its rights and performance
obligations pursuant to the Operative Documents. For any breach of the foregoing
covenants, the injured party shall be entitled to injunctive relief or any other
legal or equitable remedies available, including the recovery of damages
suffered as a result of such breach, but no such breach shall constitute an
Event of Default.
(j) Owner Trustee and Owner Participant severally, not jointly,
represent and warrant that none of the funds made available by Pass Through
Trustee pursuant to Section 2.01 will be used for the purpose of purchasing or
carrying any "margin security" as defined in Regulation U of the Board of
Governors of the Federal Reserve System or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
such margin security or for any other purpose which might cause the transaction
contemplated by this Agreement to constitute a "purpose credit" within the
meaning of Regulation X of the Board of Governors of the Federal Reserve System,
assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
(k) Each of Owner Participant, Owner Trustee, Loan Trustee and
Lessee covenants and agrees that if Lessee elects to terminate the Lease and
purchase the Aircraft pursuant to Section 19(d) of the Lease, then each of the
parties will execute and deliver appropriate documentation transferring all
right, title and interest in the Aircraft to Lessee (including, without
limitation, such bills of sale and other instruments and documents as Lessee
reasonably requests), and if Lessee, in connection with such purchase, elects to
assume the obligations of Owner Trustee pursuant to the Indenture and the
Equipment Notes, each of the parties will execute and deliver appropriate
documentation permitting Lessee to assume such obligations on the basis of full
recourse to Lessee, maintaining the security interest in the Aircraft created by
the Indenture, releasing Owner Participant and Owner Trustee from all future
obligations in respect of the Equipment Notes, the Indenture and all other
Operative Documents and all such other actions as are reasonably necessary to
permit such assumption by Lessee.
Notwithstanding the foregoing, Lessee shall not be entitled to
assume the obligations of Owner Trustee in respect of the Equipment Notes unless
Lessee causes to be delivered to Loan Trustee (a) an opinion of counsel to the
effect that (i) the Lien of the Indenture continues to be a valid and duly
perfected first priority security interest in and to the Aircraft, (ii) Loan
Trustee will be entitled to the benefits of Section 1110 (if immediately prior
to such assumption Owner Trustee was entitled to the benefits of Section 1110)
and (iii) the Pass Through Trusts will not be subject to Federal income taxation
and the holders of the Pass Through Certificates will not recognize income, gain
or loss for Federal income tax purposes as a result of such assumption and will
be subject to Federal income tax in the same amounts, in the same manner, and at
the same time as would have been the case if such assumption had not occurred
and (b) written confirmation from the Rating Agencies that such assumption will
not result in a withdrawal, suspension or downgrading of the rating of any class
of Pass Through Certificates (without regard to the Policy (as defined in the
Policy Provider Agreement)). In addition, unless waived by Noteholders, Lessee
shall not be entitled to assume the Equipment Notes on the date for purchase of
the Aircraft pursuant to Section 19(d) of the Lease if on such date an Event of
Default shall have occurred and be continuing or any condition or event shall
exist which, with the passage of time or giving of notice or both, would become
such an Event of Default.
(l) Wells Fargo Bank Northwest, National Association and State
Street each agrees for the benefit of Lessee to comply with the terms of the
Indenture which it is required to comply with in its individual capacity.
(m) Each of Owner Participant and Owner Trustee hereby (A) agrees
with Lessee and Noteholders to comply with all of the terms of the Trust
Agreement (as the same may hereafter be amended or supplemented from time to
time in accordance with the terms thereof) applicable to it; (B) agrees with
Lessee and Loan Trustee not to amend, supplement or otherwise modify any
provision of the Trust Agreement in a manner adversely affecting such party
without the prior written consent of such party; and (C) agrees with Lessee and
Noteholders not to revoke the Trust Agreement without the prior written consent
of Lessee (so long as the Lease remains in effect) and Loan Trustee (so long as
the Lien of the Indenture remains in effect or there are any Equipment Notes
outstanding). Notwithstanding the foregoing, so long as the Lease has not been
terminated, Loan Trustee and Owner Trustee hereby agree for the benefit of
Lessee that without the consent of Lessee they will not (i) amend or modify
Article III or IX of the Indenture, (ii) make any amendment which will affect
the stated principal amount or interest on the Equipment Notes or (iii) amend or
modify the provisions of Sections 2.05 or 10.15 of the Indenture. Loan Trustee
and Owner Trustee agree to furnish to Lessee promptly copies of any supplement,
amendment, waiver or modification of any of the Operative Documents to which
Lessee is not a party. Notwithstanding anything to the contrary contained
herein, in the Trust Agreement or in any other Operative Document, Owner
Participant will not consent to or direct a change in the situs of the Trust
Estate without the prior written consent of Lessee. Each Noteholder agrees that
it will not take any action in respect of the Indenture Estate except through
Loan Trustee pursuant to the Indenture or as otherwise permitted by the
Indenture.
(n) Owner Participant will not, directly or indirectly sell, assign,
convey or otherwise transfer any of its right, title or interest in and to this
Agreement, the Trust Estate or the Trust Agreement or any proceeds therefrom to
any person or entity, unless (i) the proposed transferee is a "Transferee" (as
defined below), (ii) Lessee shall have received from Owner Participant so
seeking to transfer such right, title or interest reasonably satisfactory
indemnification for any loss of tax benefits to, and increase in the tax
liability of, Lessee, and (iii) Owner Participant sells, assigns, conveys or
otherwise transfers all of its right, title and interest in and to this
Agreement, the Trust Estate, the Trust Agreement and the proceeds therefrom to a
single entity. A "Transferee" means either (A) a bank or other financial
institution with a combined capital, surplus and undivided profits of at least
$50,000,000 or a corporation whose tangible net worth is at least $50,000,000,
exclusive of goodwill, in either case as of the proposed date of such transfer,
as determined in accordance with generally accepted accounting principles, or
(B) any subsidiary of such a bank, financial institution or corporation,
provided that such bank, financial institution or corporation furnishes to Owner
Trustee, Loan Trustee and Lessee a guaranty with respect to Owner Participant's
obligations, in the case of Owner Trustee, under the Trust Agreement and, in the
case of Loan Trustee and Lessee, Owner Participant's obligations hereunder,
including but not limited to, under Subsections 6.01(d), 6.01(e), 6.01(g) and
6.01(h), in form and substance reasonably satisfactory to Lessee, Owner Trustee
and Loan Trustee. Unless Lessee gives its written consent thereto (which may be
given or withheld in its sole discretion), no Transferee may be an airline, a
commercial air carrier, an air freight forwarder, an airframe manufacturer, an
engine manufacturer, an entity engaged in the business of parcel transport by
air or other similar person or a corporation or other entity controlling,
controlled by or under common control with such an airline, a commercial air
carrier, an air freight forwarder, an airframe manufacturer, an engine
manufacturer, an entity engaged in the business of parcel transport by air or
other similar person. Each such transfer to a Transferee shall be subject to the
condition that (1) upon giving effect to such transfer, the Transferee is a
Citizen of the United States (without making use of a voting trust agreement,
voting powers agreement or similar arrangement unless approved by Lessee), and
has full power and authority to enter into the transactions contemplated hereby,
(2) the Transferee has the requisite power and authority to enter into and carry
out the transactions contemplated hereby and such Transferee shall have
delivered to Lessee, Owner Trustee and Loan Trustee an opinion of counsel in
form and substance reasonably satisfactory to such persons as to the due
authorization, execution and delivery and the legal, valid and binding effect
and enforceability of the agreement or agreements referred to in the next clause
with respect to the Transferee and any guaranty provided pursuant to the
provisions of this Subsection 6.01(n) as to the guarantor, (3), the Transferee
enters into an agreement or agreements, in form and substance reasonably
satisfactory to Owner Trustee, Lessee and Loan Trustee, whereby the Transferee
confirms that it shall be deemed a party to this Agreement and a party to the
Trust Agreement and agrees to be bound by all the terms of, and to undertake all
of the obligations of Owner Participant contained in the Operative Documents and
makes the representations and warranties made by Owner Participant thereunder,
(4) such transfer does not affect the registration of the Aircraft under the
Transportation Code, or any rules or regulations promulgated thereunder or
create a relationship which would be in violation thereof or violate any
provision of the Securities Act of 1933, as amended, or any other applicable
Federal or state law, (5) the transferor Owner Participant assumes the risk of
any loss of Interest Deductions, Amortization Deductions and MACRS Deductions,
the risk of any Inclusion Event (each as defined in the Tax Indemnity
Agreement), and the risk of any sales, use, value added, or similar tax
resulting from such transfer, (6) the transferor Owner Participant pays all of
the costs and expenses (including, without limitation, fees and expenses of
counsel) incurred in connection with such transfer, including the costs and
expenses of Owner Trustee, Loan Trustee, Lessee and Noteholders in connection
therewith, and (7) the terms of the Operative Documents and the Overall
Transaction shall not be altered. Upon any such transfer by Owner Participant as
above provided, the Transferee shall be deemed Owner Participant for all
purposes hereof and of the other Operative Documents and each reference herein
to the transferor Owner Participant shall thereafter be deemed for all purposes
to be to the Transferee and the transferor Owner Participant shall be relieved
of all obligations of the transferor Owner Participant under the Operative
Documents to which Owner Participant is a party arising after the date of such
transfer except to the extent fully attributable to or arising out of acts or
events occurring prior thereto and not assumed by the Transferee (in each case,
to the extent of the participation so transferred). If Owner Participant intends
to transfer any of its interests hereunder, it shall give 30 days prior written
notice thereof to Loan Trustee, Owner Trustee and Lessee, specifying the name
and address of the proposed Transferee and demonstrating that the proposed
Transferee meets all of the requirements set forth herein.
Section 6.02 Certain Covenants of Lessee. Lessee covenants and
agrees with Loan Trustee, Owner Participant and Owner Trustee as follows:
(a) On and after the Delivery Date, Lessee will cause to be done,
executed, acknowledged and delivered such further acts, conveyances and
assurances as Loan Trustee, Owner Participant or Owner Trustee reasonably
requests for accomplishing the purposes of this Agreement and the other
Operative Documents; provided that any instrument or other document so executed
by Lessee will not expand any obligations or limit any rights of Lessee in
respect of the transactions contemplated by the Operative Documents. Lessee,
forthwith upon delivery of the Aircraft under the Lease, shall cause the
Aircraft to be duly registered, and at all times thereafter to remain duly
registered, in the name of Owner Trustee, except as otherwise required or
permitted hereunder or under the Lease, under the Transportation Code, or shall
furnish to Owner Trustee such information as may be required to enable Owner
Trustee to make application for such registration, and shall promptly furnish to
Owner Trustee such information as may be required to enable Owner Trustee to
timely file with any governmental authority any reports required to be filed by
it as the lessor under the Lease or as the owner of the Aircraft.
(b) Lessee will cause the Lease, all Lease Supplements, all
amendments to the Lease, the Indenture and all supplements and amendments to the
Indenture to be promptly filed and recorded, or filed for recording, with the
FAA to the extent permitted under the Transportation Code and the rules and
regulations of the FAA thereunder. Upon the execution and delivery of the FAA
Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the
Indenture Supplement and the Amended and Restated Indenture shall be filed for
recording with the FAA in the following order of priority; first, the FAA Bill
of Sale, second, the Amended and Restated Indenture (with the Indenture
Supplement covering the Aircraft attached), and third, the Lease (with the Lease
Supplement covering the Aircraft, the Amended and Restated Indenture and the
Indenture Supplement attached).
(c) Lessee, at its expense, will take, or cause to be taken, such
action with respect to the recording, filing, re-recording and refiling of the
Lease and any financing statements or other instruments as are necessary to
maintain, so long as the Lease is in effect, the perfection of the security
interests created by the Amended and Restated Indenture or will furnish Loan
Trustee, Owner Participant and Owner Trustee timely notice of the necessity of
such action, together with such instruments, in execution form, and such other
information as may be required to enable Loan Trustee, Owner Participant or
Owner Trustee to take such action. In addition, Lessee will pay any and all
recording, stamp and other similar taxes payable in the United States, and in
any other jurisdiction where the Aircraft is registered, in connection with the
execution, delivery, recording, filing, re-recording and refiling of the
Indenture or any such financing statements or other instruments. Lessee will
notify Loan Trustee, Owner Participant and Owner Trustee of any change in its
jurisdiction of organization (as such term is used in Article 9 of the Uniform
Commercial Code as in effect in the State of Delaware) promptly after making
such change or in any event within the period of time necessary under applicable
law to prevent the lapse of perfection (absent refiling) of financing statements
filed under the Operative Documents.
(d) Lessee shall at all times maintain its corporate existence
except as permitted by Subsection 6.02(e).
(e) Lessee shall not consolidate with or merge into any other Person
or convey, transfer or lease substantially all of its assets as an entirety to
any Person, unless:
(i) the successor or transferee entity shall, if and to the extent
required under Section 1110 in order that Owner Trustee continues to be
entitled to any benefits of Section 1110 with respect to the Aircraft, be
a Citizen of the United States and a Certificated Air Carrier and shall
execute and deliver to Loan Trustee, Owner Trustee and Owner Participant
an agreement containing the express assumption by such successor or
transferee entity of the due and punctual performance and observance of
each covenant and condition of the Operative Documents to which Lessee is
a party to be performed or observed by Lessee;
(ii) immediately after giving effect to such transaction, no Event
of Default shall have occurred and be continuing; and
(iii) Lessee shall deliver to Loan Trustee, Owner Participant and
Owner Trustee a certificate signed by a Responsible Officer of Lessee, and
an opinion of counsel (which may be internal counsel to Lessee), each
stating that such consolidation, merger, conveyance, transfer or lease and
the assumption agreement mentioned in clause (i) above comply with this
Subsection 6.02(e) and that all conditions precedent herein relating to
such transaction have been complied with (except that such opinion need
not cover the matters referred to in clause (ii) above and may rely, as to
factual matters, on a certificate of an officer of Lessee) and, in the
case of such opinion, that such assumption agreement has been duly
authorized, executed and delivered by such successor Person and is
enforceable against such successor Person in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity.
Upon any consolidation or merger, or any conveyance, transfer or
lease of substantially all of the assets of Lessee as an entirety in accordance
with this Subsection 6.02(e), the successor Person formed by such consolidation
or into which Lessee is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, Lessee under this Agreement and the other Operative Documents with the
same effect as if such successor Person had been named as Lessee herein.
(f) Lessee shall remain a Certificated Air Carrier for as long as
and to the extent required under Section 1110 in order that Owner Trustee shall
be entitled to any of the benefits of Section 1110 with respect to the Aircraft.
(g) Commencing in ____, on or before [April 30] of each year during
the Term, Lessee will deliver to Lessor and Loan Trustee a certificate of
Lessee, signed by a Responsible Officer of Lessee to the effect that the signer
is familiar with or has reviewed the relevant terms of the Lease and the signer
does not have actual knowledge of the existence, as of the date of such
certificate, of any condition or event which constitutes a Lease Default or an
Event of Default. Lessee agrees that if a Responsible Officer of Lessee has
actual knowledge of the existence of a Lease Default, then Lessee shall promptly
give to Lessor, Owner Participant and Loan Trustee notice thereof and such other
information relating thereto as Lessor, Owner Participant or Loan Trustee may
reasonably request. During the Term, Lessee agrees to furnish to Lessor, Owner
Participant and, so long as any Equipment Notes remain unpaid, Loan Trustee,
Policy Provider and Liquidity Provider: (i) within 60 days after the end of each
of the first three quarterly periods in each fiscal year of Lessee, either (x) a
consolidated balance sheet of Lessee and its consolidated subsidiaries prepared
by it as of the close of such period, together with the related consolidated
statements of income for such period or (y) a report of Lessee 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
Lessee, either (x) a consolidated balance sheet of Lessee 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 Lessee on Form 10-K in respect of such
year in the form filed with the Securities and Exchange Commission. Lessee may
fulfill the requirements of the preceding sentence by providing the material
described therein in an electronic format by electronic mail or accessible over
the Internet.
ARTICLE 7
OWNER FOR TAX PURPOSES
Section 7.01 Owner for Federal Tax Purposes. It is hereby agreed
among Lessee, Owner Participant and Owner Trustee that for Federal income tax
purposes Owner Participant will be the owner of the Aircraft and Lessee will be
the lessee thereof, and each party hereto agrees to characterize the Lease as a
lease for Federal income tax purposes.
ARTICLE 8
SITUS OF THE OWNER TRUST
Section 8.01 Change of Situs of Owner Trust. Owner Participant
agrees that if, at any time, the Trust Estate becomes subject to any Taxes for
which it is indemnified pursuant to Section 4.02 and if, as a consequence
thereof, Lessee requests that the situs of the trust be moved to another state
in the United States from the state in which it is then located, the situs of
the trust may be moved with the written consent of Owner Participant (which
consent shall not be unreasonably withheld) and Owner Participant will take
whatever action may be reasonably necessary to accomplish such removal. Lessee
shall provide such additional tax indemnification as Owner Participant and Loan
Trustee may reasonably request, the rights and obligations under the Operative
Documents of Owner Participant and Loan Trustee shall not be altered as a result
of the taking of such action, the Lien of the Indenture on the Indenture Estate
shall not be adversely affected by such action, Owner Participant and Loan
Trustee shall have received an opinion or opinions of counsel (satisfactory to
each recipient), in scope, form and substance satisfactory to them to the effect
that (i) the trust, as thus removed, remains a validly established trust, (ii)
any amendments to the Trust Agreement necessitated by such removal have been
duly authorized, executed and delivered by the parties thereto and constitute
the valid and binding obligations of such parties, enforceable in accordance
with their terms, (iii) such removal will not result in the imposition of, or
increase in the amount of, any Tax for which Lessee is not required to indemnify
Owner Participant, Loan Trustee, Owner Trustee or the Trust Estate pursuant to
Section 4.02 (taking into account any additional indemnification provided by
Lessee pursuant to the first clause of this sentence), and (iv) such removal
will not result in any loss of Interest Deductions or MACRS Deductions or an
Inclusion Event (as defined in the Tax Indemnity Agreement) with respect to
which Lessee is not required to indemnify Owner Participant pursuant to Section
[4] of the Tax Indemnity Agreement (taking into account any additional
indemnification provided by Lessee pursuant to the first clause of this
sentence). If such removal involves the replacement of Owner Trustee, Loan
Trustee and Owner Participant must also receive an opinion of counsel to such
successor Owner Trustee in form and substance reasonably satisfactory to each
recipient covering the matters described in the opinion delivered pursuant to
Subsection 3.01(k) and such other matters as they reasonably request. Lessee
shall indemnify and hold harmless Owner Participant and Loan Trustee on an
After-Tax Basis against any and all reasonable and actual costs and expenses
including reasonable counsel fees and disbursements, registration fees,
recording or filing fees and taxes incurred by Owner Trustee, Owner Participant
and Loan Trustee in connection with such change of situs.
ARTICLE 9
INSTRUCTIONS TO OWNER TRUSTEE
Section 9.01 Instructions to Owner Trustee. Owner Participant agrees
that its releasing the amount of its Commitment for the Aircraft to the account
of Owner Trustee in accordance with the terms of Article 2 shall constitute,
subject to satisfaction or waiver of the conditions set forth in Section 3.01,
without further act, authorization and direction by Owner Participant to Owner
Trustee:
(i) to pay to Lessee Lessor's Cost for the Aircraft;
(ii) to accept from Lessee the FAA Bill of Sale and the Bill of
Sale;
(iii) to execute an Aircraft Registration Application, the Lease
Supplement and the Indenture Supplement, in each case covering the
Aircraft;
(iv) to issue the Assumed Equipment Notes to Pass Through Trustee to
finance a portion of the Lessor's Cost for the Aircraft and to execute and
deliver to Subordination Agent on behalf of Pass Through Trustee for each
of the Pass Through Trusts a principal amount of Assumed Equipment Notes
bearing the interest rate set forth opposite the name of such Pass Through
Trust on Schedule I, which Assumed Equipment Notes shall be in the
principal amounts set forth on Schedule I, pursuant hereto and to the
Amended and Restated Indenture; and
(v) to take such other action as may be required to be taken by
Owner Trustee on the Delivery Date by the terms of any Operative Document.
ARTICLE 10
INTEREST OF NOTEHOLDERS
Section 10.01 Extent of Interest of Noteholders. No Noteholder shall
have any further interest in, or other right with respect to, the mortgage and
security interests created by the Indenture when and if the principal of and
interest on all Equipment Notes held by such holder and all other sums payable
to such holder hereunder, under the Indenture and under such Equipment Notes are
paid in full. Each Pass Through Trustee and, by its acceptance of an Equipment
Note, each Noteholder agrees that it will look solely to the income and proceeds
from the Indenture Estate to the extent available for distribution to such
Noteholder as provided in Article III of the Indenture and that neither Owner
Participant nor Owner Trustee shall be personally liable to Pass Through
Trustees or any Noteholder for any amounts payable under the Equipment Notes,
the Indenture or hereunder, except as expressly provided in the Operative
Documents.
ARTICLE 11
EXCESS AMOUNT
Section 11.01 Excess Amount. Loan Trustee, and by acceptance of the
Equipment Notes Noteholders, hereby (i) agree that for purposes of the
application of Section 1111(b) of the Bankruptcy Code or any successor provision
or any comparable provisions that the "debtor" in any bankruptcy proceeding
involving the assets held or administered pursuant to the Trust Agreement shall
be strictly limited to the Trust Estate (excluding the Excluded Payments) and
(ii) make (and hereby agree to make), with respect to the Indenture Estate, the
election provided for in Section 1111(b)(2) of the Bankruptcy Code. It is hereby
agreed by Loan Trustee, and by the acceptance of the Equipment Notes Noteholders
hereby agree, that if (i) all or any part of the Trust Estate becomes the
property of, or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code or any comparable proceeding,
(ii) pursuant to such reorganization provisions Owner Trustee (in its individual
capacity) or Owner Participant is required, by reason of Owner Trustee (in its
individual capacity) or Owner Participant being held to have recourse liability
to the holder(s) of the Equipment Notes or to Loan Trustee, directly or
indirectly (other than the recourse liability of Owner Participant under this
Agreement), to make payment on account of any amount payable as principal or
interest on the Equipment Notes and (iii) any holder(s) of the Equipment Notes
or Loan Trustee actually receives any Excess Amount which reflects any payment
by Owner Trustee (in its individual capacity) or Owner Participant on account of
clause (ii) above, then such holder(s) or Loan Trustee, as the case may be,
shall promptly refund to Owner Trustee or Owner Participant (whichever shall
have made such payment) such Excess Amount. For purposes of this Section 11.01,
"Excess Amount" means the amount by which such payment exceeds the amount which
would have been received by the holder(s) of the Equipment Notes or Loan Trustee
if Owner Trustee (in its individual capacity) or Owner Participant had not
become subject to the recourse liability referred to in (ii) above. Nothing
contained in this Section 11.01 shall prevent the holder of an Equipment Note or
Loan Trustee from enforcing any personal recourse obligation (and retaining the
proceeds thereof) of Owner Trustee (in its individual capacity) or Owner
Participant under this Agreement or the Indenture (and any exhibits or annexes
thereto).
ARTICLE 12
TRANSACTION EXPENSES
Section 12.01 Invoices and Payment. Each of the parties hereto shall
promptly submit to Owner Trustee and Lessee for their prompt approval (which
shall not be unreasonably withheld) copies of invoices in reasonable detail of
the Transaction Expenses for which it is responsible for providing information
as they are received (but in no event later than [________________]). Owner
Participant agrees to transfer to Owner Trustee promptly but in any event no
later than [______________] the amount necessary for Owner Trustee to pay
Transaction Expenses. To the extent of funds received by it, Owner Trustee
agrees to pay all invoices of Transaction Expenses that have been approved by it
and Lessee promptly upon receipt thereof. Notwithstanding the foregoing, Lessee
may pay directly any or all Transaction Expenses in excess of [____]% of
Lessor's Cost.
Section 12.02 Payment of Other Expenses. If the transaction
contemplated by this Agreement fails to close as a result of Owner Participant's
failure to negotiate in good faith or to comply with the terms and conditions
upon which its participation in the transaction was predicated, Owner
Participant will be responsible for all of its fees and expenses, including but
not limited to the fees, expenses and disbursements of its special counsel.
ARTICLE 13
REFINANCINGS
Section 13.01 Refinancings. (a) So long as no Event of Default has
occurred and is continuing, Lessee may refinance all (but not less than all) of
the Equipment Notes no more than three times by giving written notice to Owner
Participant and Owner Trustee for a voluntary redemption of the Equipment Notes
by Owner Trustee. Owner Participant will negotiate promptly in good faith to
conclude an agreement with Lessee as to the terms of such refinancing (including
the terms of any debt to be issued in connection with such refinancing). No such
refinancing may increase Owner Participant's investment in the beneficial
ownership of the Aircraft.
Upon such agreement:
(1) Within ten Business Days of such agreement, Owner Participant
will deliver to Lessee a certificate of an authorized representative of Owner
Participant (the "Refinancing Certificate") setting forth (i) the proposed date
on which the outstanding Equipment Notes will be redeemed, any new debt will be
issued and the other aspects of such refinancing will be consummated (such date,
the "Refinancing Date") and (ii) the following information calculated pursuant
to the provisions of paragraph (7) of this Subsection 13.01(a): (A) subject to
the limitations set forth in this Section 13.01, the proposed adjusted
debt/equity ratio, (B) the principal amount of debt to be issued by Owner
Trustee on the Refinancing Date, (C) the amount, if any, by which Owner
Participant's aggregate investment in the beneficial interest in the Aircraft is
to be decreased and (D) the proposed revised schedules of Basic Rent percentages
and allocations, debt amortization, Special Purchase Price, [Initial
Installment, Remaining Installments,] Stipulated Loss Value percentages and
Termination Value percentages.
(2) Within fourteen days of its receipt of the Refinancing
Certificate, Lessee may demand a verification of the information set forth
therein pursuant to Exhibit E to the Lease.
(3) Upon the acceptance by Lessee of the accuracy of the information
set forth in the Refinancing Certificate (or the determination pursuant to such
verification procedures), the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale) with the institution or institutions to be named therein providing
for (i) the issuance and sale by Owner Trustee to such institution or
institutions on the Refinancing Date of debt securities in an aggregate
principal amount specified in the Refinancing Certificates (or determined
pursuant to the verification procedures) which amount shall be equal to the
aggregate principal amount of all Equipment Notes outstanding on the Refinancing
Date (such debt securities, the "New Debt") except that the principal amount of
New Debt may exceed the principal amount of all outstanding Equipment Notes in
connection with the first refinancing under this Section 13.01 but may not be
more than 105% of the principal amount of such outstanding Equipment Notes and
the maturity of the New Debt may not exceed by more than 6 months the maturity
of the Equipment Notes outstanding on the Refinancing Date, (ii) the application
of the proceeds of the sale of the New Debt to the redemption of all such
Equipment Notes on the Refinancing Date and (iii) the payment to Owner Trustee
of the excess, if any, of such proceeds over the amounts necessary to effect
such redemption.
(4) Lessee shall notify Loan Trustee pursuant to Section 2.11 of the
Indenture, and Lessee and Owner Trustee will amend the Lease to provide that (i)
Basic Rent payable in respect of the period from and after the Refinancing Date
shall be as provided in the Refinancing Certificates (or determined pursuant to
the verification procedures) and (ii) amounts payable in respect of the Special
Purchase Price, [Initial Installment, Remaining Installments,] Stipulated Loss
Value and Termination Value from and after the Refinancing Date shall be as
provided in the Refinancing Certificates (or determined pursuant to the
verification procedures);
(5) Owner Trustee will enter into an agreement to provide for the
securing thereunder of the New Debt in like manner as the Equipment Notes and
will enter into such amendments and supplements to the Indenture (or such new
indenture or other security agreement) as may be necessary to effect such
refinancing;
(6) Owner Participant shall pay all of the expenses (other than
those of Lessee) of such refinancing (including, but not limited to, the fees,
expenses and disbursements of counsel and any placement or underwriting fees)
and such expenses shall be treated as Transaction Expenses; and
(7) when calculating any of the information required to be set forth
in a Refinancing Certificate, Owner Participant shall make such calculations in
a manner which (A) maintains Owner Participant's Net Economic Return (except to
the extent the assumptions referred to in the definition of "Net Economic
Return" have been altered since the Delivery Date in connection with an
adjustment to Rents pursuant to Section 3(c) of the Lease or such assumptions
are the subject of the recalculations being conducted by Owner Participant), and
(B) to the extent possible consistent with clause (A), minimizes the Net Present
Value of Rents.
(b) The Equipment Notes are not subject to voluntary redemption by
Owner Trustee without the consent of Lessee except as set forth in Section 2.19
of the Indenture.
ARTICLE 14
RELEASE OF COLLATERAL
Section 14.01 Release of Collateral, Assumption and Release. (a)
Effective upon, and simultaneously with, the Participants' making their
Commitments available pursuant to Section 2, but immediately prior to the
execution and delivery of the Amended and Restated Indenture, Loan Trustee
agrees that the Collateral (as such term is defined in the Original Indenture)
described in paragraph (2) of the Granting Clause of the Original Indenture (the
"Released Collateral") is hereby released from the Lien of the Original
Indenture, and the parties hereto consent and agree that the Released Collateral
shall so be released.
(b) Effective upon and by the execution and delivery of the Amended
and Restated Indenture, Owner Trustee assumes in accordance with the terms of
the Amended and Restated Indenture all of the obligations and liabilities of
Lessee under the Original Indenture and the Original Equipment Notes to the
extent such liabilities and obligations are set forth in the Amended and
Restated Indenture (as provided in and collectively evidenced by the Assumed
Equipment Notes and the Amended and Restated Indenture), provided that
Noteholders and Loan Trustee agree to look only to Lessee, and Lessee hereby
agrees that it is solely responsible, for claims with respect to indemnity and
all other obligations (other than as to interest accruing after the Delivery
Date and as to principal on the Equipment Notes) arising, or as a result of acts
or omissions occurring, prior to the Delivery Date. Concurrently with such
assumption and subject to the immediately preceding sentence, Loan Trustee and
Pass Through Trustee for each Pass Through Trust each, without further act,
hereby releases Lessee from all liabilities and obligations under the Original
Indenture including, without limitation, all liabilities and obligations under
the Original Equipment Notes.
ARTICLE 15
DELIVERY DATE INTEREST PAYMENT
Section 15.01 Delivery Date Interest Payment. (a) Lessee shall pay
to Loan Trustee on the Delivery Date and immediately prior to the execution and
delivery of the Amended and Restated Indenture, interest accrued on the Original
Equipment Notes from and including the date of issuance of the Original
Equipment Notes, to, but excluding, the Delivery Date. Loan Trustee shall
deposit such payments in a non-interest bearing account for payment to
Noteholders on the next Payment Date.
(b) Amounts payable by Lessee pursuant to Subsection 15.01(a) shall
be paid to Loan Trustee at State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No.
9903-990-1, Attention: Corporate Trust Department, Reference: Delta (N_____), by
wire transfer of immediately available funds in Dollars.
(c) Loan Trustee agrees that its authentication of the Assumed
Equipment Notes shall constitute its acknowledgement, without further act, of
its receipt in full of the interest payable pursuant to Subsection 15.01(a).
(d) Each of the parties hereto agrees that, for Federal income tax
purposes, (A) Lessee shall be treated as the initial borrower with respect to
the Equipment Notes and may deduct as its interest expense all interest paid or
payable with respect to the Equipment Notes for the period prior to the Delivery
Date, and (B) Owner Trustee shall be treated as the borrower with respect to the
Equipment Notes on and after the Delivery Date.
ARTICLE 16
MISCELLANEOUS
Section 16.01 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices required or permitted under the terms
and provisions of this Agreement shall be in English and in writing, and any
such notice may be given by registered or certified United States mail, courier
service or facsimile or any other customary means of communication, 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:
if to Lessee, addressed to:
Delta Air Lines, Inc.
1030 Delta Boulevard
Atlanta, Georgia 30320
Attention: Treasurer, Dept. 856
Telephone: (404) 714-1724
Facsimile: (404) 715-4862
with a copy to the General Counsel at the same address, but Dept. 971
Telephone: (404) 715-2387
Facsimile: (404) 733-1657
if to Owner Trustee, addressed to:
Wells Fargo Bank Northwest, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Division
Telephone: (___) ___-____
Facsimile: (801) 246-5053
if to Owner Participant, addressed to:
[Address]
Attention: [____________]
Telephone: (___) ___-____
Facsimile: (___) ___-____
if to State Street, Loan Trustee, Subordination Agent or any Pass Through
Trustee, addressed to:
State Street Bank And Trust Company of Connecticut,
National Association
225 Asylum Street
Goodwin Square
Hartford, Connecticut 06103
Attention: Corporate Trust Division
Telephone: (860) 244-1844
Facsimile: (860) 244-1881
or if to any subsequent Noteholder, addressed to such Noteholder at its address
set forth in the Equipment Note Register maintained pursuant to Section 2.07 of
the Indenture.
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 16.01.
Section 16.02 Survival of Representations, Warranties, Indemnities,
Covenants and Agreements. Except as otherwise provided herein, the
representations, warranties, indemnities, covenants and agreements of Lessee,
State Street, Loan Trustee, Subordination Agent, Owner Participant, Owner
Trustee, each Pass Through Trustee and Noteholders herein, and each of their
obligations hereunder, shall survive the making available of the respective
Commitments by Pass Through Trustee and Owner Participant, the delivery or
return of the Aircraft, the transfer of any interest of Owner Participant in the
Trust Estate or the Aircraft or any Engine or the transfer of any interest by
any Noteholder in any Equipment Note or the Indenture Estate and the expiration
or termination (to the extent arising out of acts or events occurring prior to
such expiration) of any Operative Documents.
Section 16.03 Governing Law. THIS AGREEMENT 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.
Section 16.04 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 16.05 No Oral Modifications or Continuing Waivers; Consents.
Subject to Section 9.01 of the Indenture, no terms or provisions of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which the enforcement of
the change, waiver, discharge or termination is sought. No such change, waiver,
discharge or termination shall be effective unless a signed copy thereof is
delivered to Loan Trustee. Each Pass Through Trustee and, by its acceptance of
an Equipment Note, each subsequent Noteholder covenants and agrees that it shall
not unreasonably withhold its consent to any consent of Loan Trustee requested
by Lessee under the Indenture.
Section 16.06 Effect of Headings and Table of Contents. The headings
of the various Articles and Sections herein and in the Table of Contents are for
convenience of reference only and do not define or limit any of the terms or
provisions hereof.
Section 16.07 Successors and Assigns. All covenants, agreements,
representations and warranties in this Agreement by Lessee, by State Street,
individually or as Loan Trustee, Subordination Agent or Pass Through Trustee, by
Owner Trustee (in its individual capacity or as trustee), by Owner Participant,
or by any Noteholder, shall bind and inure to the benefit of and be enforceable
by Lessee, and subject to the terms of Subsection 6.02(e), its successors and
permitted assigns, each Pass Through Trustee and any successor or other trustee
under the Pass Through Trust Agreement to which it is a party, Subordination
Agent and its successor under the Intercreditor Agreement, Loan Trustee and its
successor under the Indenture, Owner Participant and, subject to the terms of
the Trust Agreement, its successors and permitted assigns, and Owner Trustee and
its successors as Owner Trustee under the Trust Agreement, whether so expressed
or not.
Section 16.08 Benefits of Agreement. Nothing in this Agreement,
express or implied, gives to any Person, other than the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement, except as expressly provided herein. Lessee agrees
and acknowledges that Liquidity Provider and Policy Provider shall be third
party beneficiaries of the indemnities contained in Section 4.03 and may rely on
such indemnities to the same extent as if such indemnities were made to
Liquidity Provider and Policy Provider directly.
Section 16.09 Counterparts. This Agreement may be executed in any
number of counterparts. Each of the parties hereto shall not be required to
execute the same counterpart. Each counterpart of this Agreement including a
signature page or pages executed by each of the parties hereto shall be an
original counterpart of this Agreement, but all of such counterparts shall
together constitute one instrument.
Section 16.10 Submission to Jurisdiction. Each of the parties
hereto, to the extent it may do so under applicable law, for purposes hereof and
of all other Operative Documents 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 Agreement, the Lease, the
Tax Indemnity Agreement or any other Operative Document, the subject matter
hereof or thereof or any of the transactions contemplated hereby or thereby
brought by any party or parties hereto, 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 Agreement, the Lease, the Tax
Indemnity Agreement or any other Operative Document or the subject matter hereof
or thereof or any of the transactions contemplated hereby or thereby may not be
enforced in or by such courts.
Section 16.11 Obligations of Owner Trustee. The parties hereto agree
that all of the statements, representations, covenants and agreements made by
Owner Trustee (when made in such capacity) contained in this Agreement and any
agreement referred to herein other than the Trust Agreement, unless otherwise
expressly stated, are made and intended only for the purpose of binding the
Trust Estate and establishing the existence of rights and remedies which can be
exercised and enforced against the Trust Estate. Therefore, anything contained
in this Agreement or such other agreements to the contrary notwithstanding
(except for any express provisions that Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement or
such other agreements against Owner Trustee in its individual capacity or
against any institution or person which becomes a successor trustee or
co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling person or persons of any of them; provided, however, that
this Section 16.11 shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable; and provided, further, that
nothing contained in this Section 16.11 shall be construed to limit the exercise
and enforcement in accordance with the terms of this Agreement or such other
agreements of rights and remedies against the Trust Estate. The foregoing
provisions of this Section 16.11 shall survive the termination of this Agreement
and the other Operative Documents.
Section 16.12 Payments to Owner Participant. Payments to be made to
Owner Participant as provided in Section 3.06 of the Indenture shall be made to:
[Bank] ABA No.
Account No.
Account Name:
Reference:
Section 16.13 Section 1110. It is the intention of the parties
hereto that Owner Trustee, as Lessor under the Lease, and Loan Trustee, as
assignee of such Owner Trustee's rights under the Lease pursuant to the
Indenture, will be entitled to the benefits of Section 1110 in any case in which
Lessee is a debtor under Chapter 11 of the Bankruptcy Code.
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Participation Agreement to be duly executed by their respective
officers thereunto duly authorized as of the date first above written.
DELTA AIR LINES, INC.
By:
--------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, as
Pass Through Trustee under each of the
Pass Through Trust Agreements
By:
--------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
as Subordination Agent
By:
--------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
as Loan Trustee
By:
--------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
in its individual capacity as set
forth herein
By:
--------------------------------------
Name:
Title:
[___________________________________],
as Owner Participant
By:
--------------------------------------
Name:
Title:
WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual
capacity, except as otherwise provided
herein, but solely as Owner Trustee
By:
--------------------------------------
Name:
Title:
SCHEDULE I to
PARTICIPATION AGREEMENT
COMMITMENTS
Unpaid
Interest Rate and Principal Percentage of
Purchaser Maturity Amount Lessor's Cost
- ------------------ --------------------- -------------- -----------------
Delta Air Lines 6.718% Series G-1
Pass Through Equipment Notes
Trust 2002-1G-1 due [_______ , $[__________] [________]%
20__]
Delta Air Lines 6.417% Series G-2
Pass Through Equipment Notes
Trust 2002-1G-2 due July 2, 2012 $[__________] [________]%
Delta Air Lines 7.779% Series C
Pass Through Equipment Notes
Trust 2002-1C due [_______ , $[__________] [________]%
20__]
Owner Participant Equity
Investment
[_________] $[__________] [________]%
Total
Commitments: $[________]
SCHEDULE II to
PARTICIPATION AGREEMENT
TRUST SUPPLEMENTS
Trust Supplement No. 2002-1G-1, dated as of April 30, 2002, between
Lessee and Pass Through Trustee in respect of Delta Air Lines Pass Through Trust
2002-1G-1.
Trust Supplement No. 2002-1G-2, dated as of April 30, 2002, between
Lessee and Pass Through Trustee in respect of Delta Air Lines Pass Through Trust
2002-1G-2.
Trust Supplement No. 2002-1C, dated as of April 30, 2002, between
Lessee and Pass Through Trustee in respect of Delta Air Lines Pass Through Trust
2002-1C.
EXHIBIT A-1 to
PARTICIPATION AGREEMENT
FORM OF OPINION OF
COUNSEL FOR LESSEE
[Intentionally Omitted]
EXHIBIT A-2 to
PARTICIPATION AGREEMENT
FORM OF OPINION OF
SPECIAL COUNSEL FOR LESSEE
[Intentionally Omitted]
EXHIBIT A-3 to
PARTICIPATION AGREEMENT
FORM OF ss. 1110 OPINION OF
SPECIAL COUNSEL FOR LESSEE
[Intentionally Omitted]
EXHIBIT B to
PARTICIPATION AGREEMENT
FORM OF OPINION OF
SPECIAL COUNSEL FOR LOAN TRUSTEE,
SUBORDINATION AGENT AND STATE STREET
[Intentionally Omitted]
EXHIBIT C to
PARTICIPATION AGREEMENT
FORM OF OPINION OF
SPECIAL FAA COUNSEL
[Intentionally Omitted]
EXHIBIT D to
PARTICIPATION AGREEMENT
FORM OF OPINION OF RAY, QUINNEY AND NEBEKER,
SPECIAL COUNSEL FOR OWNER TRUSTEE
[Intentionally Omitted]
EXHIBIT E-1 to
PARTICIPATION AGREEMENT
FORM OF OPINION OF [________________],
SPECIAL COUNSEL FOR OWNER PARTICIPANT
[Intentionally Omitted]
EXHIBIT E-2 to
PARTICIPATION AGREEMENT
FORM OF OPINION OF IN-HOUSE
COUNSEL FOR OWNER PARTICIPANT
[Intentionally Omitted]
EXHIBIT F to
PARTICIPATION AGREEMENT
FORM OF OPINION OF
COUNSEL FOR MANUFACTURER
[Intentionally Omitted]
EXHIBIT G to
PARTICIPATION AGREEMENT
FORM OF OPINION OF
SPECIAL COUNSEL FOR PASS THROUGH TRUSTEES
[Intentionally Omitted]
EXHIBIT I to
PARTICIPATION AGREEMENT
SCHEDULE OF COUNTRIES
Argentina Grenada Norway
Australia Guatemala Paraguay
Austria Hungary Peoples' Republic of China
Bahamas Iceland Philippines
Barbados India Poland
Belgium Indonesia Portugal
Bermuda Islands Ireland Republic of China (Taiwan)
Brazil Italy Singapore
British Virgin Islands Jamaica South Africa
Canada Japan South Korea
Cayman Islands Kuwait Spain
Chile Liechtenstein Sweden
Czech Republic Luxembourg Switzerland
Denmark Malta Thailand
Ecuador Mexico Trinidad and Tobago
Egypt Monaco United Kingdom
Finland Morocco Uruguay
France Netherlands Antilles Venezuela
Germany Netherlands, the
Greece New Zealand
EXHIBIT J to
PARTICIPATION AGREEMENT
RETURN CONDITIONS
Unless purchased by Lessee pursuant to Section 19 of the Lease, at
the time of return of the Airframe upon the expiration of the Lease at the end
of the Basic Term or any Renewal Term or upon the termination of the Lease
pursuant to Section 9(c) or 15 of the Lease:
1. Airworthiness Directives. Those Airworthiness Directives of the
FAA (if the Aircraft is then registered under the laws of the United States) or
the applicable aviation authority of the country of registry of the Aircraft (if
the Aircraft is then registered under the laws of any jurisdiction other than
the United States) applicable to the Aircraft which require terminating action
within thirty (30) days after the end of the Term shall have been accomplished.
2. Scheduled Maintenance - Airframe. The Airframe shall have not
less than 1500 hours remaining until the next scheduled "C" Check, based on the
maintenance program applicable to the Airframe at the time of return.
3. Scheduled Maintenance - Engines. Regardless of whether the
maintenance program applicable to the Engines at the time of return is an
"on-condition" maintenance program or not, the Engines in the aggregate shall
have at least 2,000 cycles remaining with no Engine having any life-limited part
with less than 1,000 cycles remaining to the next required life limited part
removal.
4. Deferred Maintenance. There shall be no open, outstanding or
deferred maintenance items, scheduled or unscheduled, against the Aircraft,
including those identified in pre-delivery inspections.
5. Manuals. The Aircraft Flight Manual, Flight Crew Operating
Manual, and the Quick Reference Handbook specific to the Aircraft shall be
delivered with the Aircraft.
6. General Appearance. The Aircraft shall be clean by U.S. airline
standards.
7. Equivalency Charge. If the Engines do not meet the condition set
forth in paragraph 3 above, then Lessee shall pay an Equivalency Charge for the
Engines in accordance with the following formula. This formula shall be
calculated individually for each life-limited part (LLP) for each Engine:
Pmt = X* (1,000 - LLPx)
WHERE:
"Pmt" is the Equivalency Charge payment. Such payment will be the
sum of all calculations for both Engines;
"X" is 100% of the then-current manufacturers list price for
each LLP which has fewer than 1,000 cycles remaining. If
Lessee has in place negotiated pricing which is less than
the manufacturers list price, then "X" shall be Lessee's
negotiated price;
LLPx is the actual number of engine cycles remaining on a
particular LLP at the time of return.
If the Airframe does not meet the conditions set forth in paragraph
2 above, then Lessee shall pay an Equivalency Charge calculated in accordance
with the following formula:
Pmt = A * ( b-c )
-------
d
WHERE:
"Pmt" is the Equivalency Charge payment;
"A" is the then current estimated cost of the next scheduled C
Check inspection (provided, that, if under the then-current
maintenance program applicable to the Aircraft the C Check
is performed in phases, "A" shall equal zero);
"b" is 1,500 hours
"c" is the actual number of operating hours remaining to the
next scheduled C Check inspection;
"d" is the total operating hours allowable between such C Check
inspections.
All Equivalency Charges, if any, shall be payable as Supplemental
Rent and shall be due within thirty (30) days after presentation to Lessee of an
invoice setting forth in reasonable detail the calculation of such amounts due.
Unless both Lessor and Lessee agree, the then-current estimated cost of the next
maintenance action or restriction will be the cost quoted by an FAA-approved
maintenance facility chosen by Lessee and reasonably acceptable to Lessor.
The results of the computation of the Equivalency Charges for the
Engines and the Airframe shall be netted so that only one consolidated payment
is required. If the result of the computation and netting is a negative number,
then (except in the case of a return in connection with an Event of Default, in
which case no payment by Lessor shall be required) Lessor shall pay such amount
to Lessee upon return of the Aircraft and Lessee's satisfaction of all of its
obligations hereunder.
8. Special Markings. Upon termination, cancellation, or expiration
of the Lease, Lessee shall, at its cost, paint over or remove from the exterior
of the Aircraft all insignias; provided, that the registration number shall not
be removed from the Aircraft. This provision will not require Lessee to strip or
repaint the Aircraft.
Annex A to
Amended and Restated
Participation Agreement, Lease and
Amended and Restated
Indenture and Security Agreement
(N[_____])
DEFINITIONS
(N[_____])
"Actual Knowledge" means, (i) as it applies to Owner Trustee or Loan
Trustee, as the case may be, actual knowledge of a Responsible Officer in the
Trust Office of Owner Trustee or in the Corporate Trust Office of Loan Trustee,
as the case may be, and (ii) as it applies to Owner Participant, actual
knowledge of a vice president or other higher officer of Owner Participant
having responsibility for the transactions contemplated by the Operative
Documents.
"Additional Insureds" has the meaning specified in Section 11(a) of
the Lease.
"After-Tax Basis" means that indemnity and compensation payments
required to be made on such basis will be supplemented by the Person paying the
base amount by that amount which, when added to such base amount, and after
deduction of all Federal, state, local and foreign Taxes required to be paid by
or on behalf of the payee with respect of the receipt or realization of any such
amounts, and after consideration of any current tax savings of such payee
resulting by way of any deduction, credit or other tax benefit attributable to
such base amount or Tax, shall net such payee the full amount of such base
amount.
"Agreement" and "Participation Agreement" mean that certain Amended
and Restated Participation Agreement (N[_____]), dated as of [_________ __,
200_], among Lessee, State Street, Pass Through Trustee under each Pass Through
Trust Agreement, Subordination Agent, Loan Trustee, Owner Participant and Owner
Trustee, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms, which Amended and Restated
Participation Agreement amended and restated in its entirety the Original
Participation Agreement.
"Aircraft" means the Airframe (or any Replacement Airframe
substituted therefor pursuant to Section 10(a) of the Lease) together with the
two Engines described in the initial Lease Supplement (or any Replacement Engine
that may from time to time be substituted for any of such Engines pursuant to
Section 5(b), Section 9(c) or Section 10(b) of the Lease), whether or not any of
such initial or substituted Engines is from time to time installed on such
Airframe or installed on any other airframe or on any other aircraft. The term
"Aircraft" includes any Replacement Aircraft.
"Airframe" means (a) the Boeing 737-832 aircraft (except (i) the
Engines or engines from time to time installed thereon and any and all Parts
related to such Engine or engines and (ii) items installed or incorporated in or
attached to such Boeing 737-832 aircraft from time to time that are excluded
from the definition of Parts (except Engines or engines)) specified in the
initial Lease Supplement and (b) any and all related Parts. The term "Airframe"
includes any Replacement Airframe that is substituted for the Airframe pursuant
to Section 10(a) of the Lease. At such time as any Replacement Airframe is so
substituted, such replaced Airframe shall cease to be an Airframe under the
Lease.
"Amended and Restated Indenture" means the Amended and Restated
Indenture and Security Agreement (N[_____]), dated as of [__________ __, 200_],
between Owner Trustee and Loan Trustee.
"Assumed Equipment Notes" means the equipment notes dated the
Delivery Date to be issued by Owner Trustee pursuant to the Amended and Restated
Indenture on the Delivery Date to Subordination Agent on behalf of Pass Through
Trustees.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 United
States Code ss.ss.101 et seq., as amended, or any successor statutes thereto.
"Base Rate" means the rate of interest announced publicly by
Citibank, N.A. in New York, New York from time to time as its base rate.
"Basic Pass Through Trust Agreement" means that certain Pass Through
Trust Agreement, dated as of November 16, 2000, between Company and State
Street, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms (but does not include any Trust
Supplement).
"Basic Rent" means, for the Basic Term, but subject always to the
provisions of Section 3(c)(iv) of the Lease, the rent payable for the Aircraft
pursuant to Section 3(b) of the Lease as adjusted as provided in Section 3(c) of
the Lease and, for any Renewal Term, Basic Rent determined pursuant to Section
19 of the Lease.
"Basic Term" means the term for which the Aircraft is leased under
the Lease pursuant to Section 3(a) thereof commencing on the Delivery Date and
ending on [__________ __, 20__], or such earlier date as the Lease is terminated
in accordance with the provisions thereof.
"Beneficial Interest" means the interest of Owner Participant under
the Trust Agreement.
"Bill of Sale" means a full warranty bill of sale covering the
Aircraft, executed by Lessee in favor of Owner Trustee, dated the Delivery Date,
specifically referring to the Airframe and each Engine, which Bill of Sale shall
contain, among other things, a statement that such Bill of Sale thereby conveys
to Owner Trustee good title to the Airframe and each Engine described in such
Bill of Sale, free and clear of all liens, encumbrances and rights of others
except the Lien of the Original Indenture and Liens permitted by clause (v) of
Section 6 of the Lease.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which commercial banks are required or authorized to close in New York,
New York, Atlanta, Georgia or the city and state in which Loan Trustee maintains
its Corporate Trust Office or receives and disburses funds.
"Certificated Air Carrier" means a Citizen of the United States
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States Code for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo or that otherwise is certified or registered to the extent required to
fall within the purview of Section 1110.
"Citizen of the United States" has the meaning specified for such
term in Section 40102(a)(15) of Title 49 of the United States Code or any
similar legislation of the United States enacted in substitution or replacement
therefor.
"Claim" has the meaning specified in Section 4.03(a) of the
Participation Agreement.
"Class C Pass Through Trust" means the Delta Air Lines Pass Through
Trust 2002-1C-1 created pursuant to the Basic Pass Through Trust Agreement, as
supplemented by Trust Supplement No. 2002-1C-1, dated as of April 30, 2002
between Lessee and State Street.
"Class G-1 Pass Through Trust" means the Delta Air Lines Pass
Through Trust 2002-1G-1 created pursuant to the Basic Pass Through Trust
Agreement, as supplemented by Trust Supplement No. 2002-1G-1, dated as of April
30, 2002 between Lessee and State Street.
"Class G-1 Trustee" means Pass Through Trustee under the Basic Pass
Through Trust Agreement, as supplemented by Trust Supplement No. 2002-1G-1,
dated as of April 30, 2002 between Lessee and State Street.
"Class G-2 Pass Through Trust" means the Delta Air Lines Pass
Through Trust 2002-1G-2 created pursuant to the Basic Pass Through Trust
Agreement, as supplemented by Trust Supplement No. 2002-1G-2, dated as of April
30, 2002 between Lessee and State Street.
"Class G-2 Trustee" means Pass Through Trustee under the Basic Pass
Through Trust Agreement, as supplemented by Trust Supplement No. 2002-1G-2,
dated as of April 30, 2002 between Lessee and State Street.
"Closing" has the meaning specified in Section 2.04 of the
Participation Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" has the meaning specified in Section 2.03 of the
Participation Agreement.
"Compulsory Acquisition" means requisition of title or other
compulsory acquisition, capture, seizure, deprivation, confiscation or detention
for any reason of the Aircraft by any government that results in the loss of
title or use of the Aircraft by Lessee (or any Permitted Sublessee) for a period
in excess of 180 days, but shall exclude requisition for use or hire not
involving requisition of title.
"Confidential Information" has the meaning specified in Section
6.01(i) of the Participation Agreement.
"Continuous Stay Period" has the meaning specified in Section
4.04(a) of the Indenture.
"Controlling Party" has the meaning specified in Section 2.06 of the
Intercreditor Agreement.
"Corporate Trust Department" or "Trust Office" means the principal
corporate trust office of Owner Trustee at MAC: U1254-031, 79 South Main Street,
Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other
office at which Owner Trustee's corporate trust business is administered which
Owner Trustee specifies by notice to Lessee, Loan Trustee and Owner Participant.
"Corporate Trust Office" means the Corporate Trust Division of Loan
Trustee located at State Street Bank and Trust Company of Connecticut, National
Association, 225 Asylum Street, Goodwin Square, Hartford, Connecticut, 06103,
Attention: Corporate Trust Division, or such other office at which Loan
Trustee's corporate trust business is administered that Loan Trustee specifies
by notice to Lessee and Owner Trustee.
"CRAF Program" means the Civil Reserve Air Fleet Program authorized
under 10 U.S.C. Section 9511 et seq. or any similar or substitute program under
the laws of the United States.
"Debt" means any liability for borrowed money, or any liability for
the payment of money in connection with any letter of credit transaction, or
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments or for the deferred purchase price of property, goods
or services.
"Debt Rate" means, with respect to any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Indenture.
"Default", when used in the Indenture, means any event or condition
that with the giving of notice or the lapse of time or both would become an
Indenture Event of Default or Lease Event of Default (excluding Lease Events of
Default related to Excluded Payments).
"Delivery Date" means the date of the initial Lease Supplement for
the Aircraft, which date shall be the date the Aircraft is leased by Lessor to
Lessee and accepted by Lessee under the Lease.
"Department of Transportation" means the United States Department of
Transportation and any agency or instrumentality of the United States government
succeeding to its functions.
"Direction" has the meaning specified in Section 2.16 of the
Indenture.
"Dollars" and "$" mean the lawful currency of the United States.
"EBO Date" means [___________ __, ____] (or, if [___________ __,
____] is not a Business Day, the Business Day immediately succeeding
[___________ __, ____]).
"Enforcement Date" has the meaning specified in Section 4.03 of the
Indenture.
"Engine" means (a) each of the two CFM International, Inc.
CFM56-7B26 engines, which may be rated at or limited to -24 or higher power,
listed by manufacturer's serial number in the initial Lease Supplement, whether
or not from time to time installed on the Airframe or installed on any other
airframe or on any other aircraft and (b) any Replacement Engine substituted for
an Engine pursuant to Section 5(b), Section 9(c) or Section 10(b) of the Lease;
together in each case with any and all related Parts. At such time as a
Replacement Engine is so substituted, such replaced Engine shall cease to be an
Engine under the Lease.
"Equipment Note" means and includes any Equipment Note originally
issued pursuant to Section 2.02 of the Indenture and any Equipment Note issued
in exchange therefor or replacement thereof pursuant to Section 2.07 or 2.08 of
the Indenture.
"Equipment Note Register" has the meaning specified in Section 2.07
of the Indenture.
"Equipment Note Registrar" has the meaning specified in Section 2.07
of the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA as in effect at the date of
the Participation Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"Event of Default" or "Lease Event of Default" has the meaning
specified for "Event of Default" in Section 14 of the Lease.
"Event of Loss" means, with respect to the Aircraft, Airframe or any
Engine, any of the following events with respect to such property:
(a) the loss of such property or of the use thereof due to
destruction, damage beyond repair or rendition of such property permanently
unfit for normal use for any reason whatsoever;
(b) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total loss, a
compromised total loss or a constructive total loss;
(c) the theft or disappearance of such property for a period in
excess of 180 days;
(d) the requisition for use of such property by any government
(other than a requisition for use by a Government or the government of the
country of registry of the Aircraft) that results in the loss of possession of
such property by Lessee (or any Permitted Sublessee) for a period in excess of
12 consecutive months or, if earlier, 30 days beyond the Term, provided,
however, that no Event of Loss pursuant to this clause (d) shall exist if Lessor
has furnished to Lessee the notice specified in Section 10(d) of the Lease;
(e) the operation or location of the Aircraft, while under
requisition for use by any government, in any area excluded from coverage by any
insurance policy in effect with respect to the Aircraft required by the terms of
Section 11 of the Lease, unless Lessee shall have obtained indemnity or
insurance in lieu thereof from such government;
(f) any Compulsory Acquisition;
(g) as a result of any law, rule, regulation, order or other action
by the FAA or other government of the country of registry, the use of the
Aircraft or Airframe in the normal business of air transportation is prohibited
by virtue of a condition affecting all aircraft of the same type for a period of
18 consecutive months, unless Lessee is diligently carrying forward all steps
that are necessary or desirable to permit the normal use of the Aircraft or
Airframe or, in any event, if such use is prohibited for a period of three
consecutive years or if such use is prohibited at the end of the Term;
(h) the requisition for use of such property by a Government or the
country of registry of the Aircraft which shall occur during the Basic Term (or
any Renewal Term) and shall continue for 30 days beyond the Term, provided,
however, that no Event of Loss pursuant to this clause (h) shall exist if Lessor
has furnished to Lessee the notice specified in Section 10(d) of the Lease; and
(i) with respect to an Engine only, any divestiture of title to or
interest in an Engine or any event with respect to an Engine that is deemed to
be an Event of Loss with respect to such Engine pursuant to Section 7(a)(vii) of
the Lease.
An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if an Event of Loss occurs with respect to the Airframe unless
Lessee elects to substitute a Replacement Airframe pursuant to Section 10(a)(i)
of the Lease.
"Excess Amount", when used in the Participation Agreement, has the
meaning specified in Section 11.01 of the Participation Agreement and, when used
in the Indenture, has the meaning specified in Section 2.18(b) of the Indenture.
"Excluded Payments" means (i) indemnity payments paid or payable by
Lessee to or in respect of Owner Participant or Owner Trustee in its individual
capacity, their respective affiliates, successors and permitted assigns and
their directors, officers, employees, servants and agents (collectively, the
"Owner Indemnitees") pursuant to Sections 4.02 and 4.03 of the Participation
Agreement, (ii) proceeds of public liability insurance in respect of the
Aircraft payable as a result of insurance claims made, or losses suffered, by
Owner Trustee or Loan Trustee in their respective individual capacities or by
any of Owner Indemnitees, (iii) proceeds of insurance maintained with respect to
the Aircraft by Owner Participant (whether directly or through Owner Trustee) or
any other Owner Indemnitee and permitted under Section 11(f) of the Lease, (iv)
all payments required to be made under the Tax Indemnity Agreement by Lessee and
all payments of Supplemental Rent by Lessee in respect of any amounts payable
under the Tax Indemnity Agreement, (v) fees payable to Owner Trustee or Loan
Trustee pursuant to the last sentence of Section 4.03(c) of the Participation
Agreement, (vi) provided that the Equipment Notes have been duly assumed by
Lessee pursuant to Section 2.17 of the Indenture, the amounts payable to Owner
Trustee pursuant to the third sentence of Section 19(d) of the Lease plus all
reasonable expenses incurred by Owner Trustee and Owner Participant in
connection with such assumption, as applicable, (vii) interest accrued on any of
the above, and (viii) any right to enforce the payment of any amount described
in clauses (i) through (vii) above and the right to declare an Event of Default
in respect of any of the foregoing amounts.
"FAA" means the United States Federal Aviation Administration and
any agency or instrumentality of the United States government succeeding to its
functions.
"FAA Bill of Sale" means the bill of sale for the Aircraft on AC
Form 8050-2 or such other form as may be approved by the FAA on the Delivery
Date, executed by Lessee in favor of Owner Trustee and dated the Delivery Date.
"Fair Market Renewal Term" has the meaning specified in Section
19(a)(2) of the Lease.
"Federal Funds Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or if such rate
is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by State Street from
three Federal funds brokers of recognized standing selected by it.
"Fixed Renewal Term" has the meaning specified in Section 19(a)(1)
of the Lease.
"Government" means the government of any of Canada, France, Germany,
Japan, The Netherlands, Sweden, Switzerland, the United Kingdom or the United
States and any instrumentality or agency thereof.
"Indemnitee" has the meaning specified in Section 4.03(b) of the
Participation Agreement.
"Indenture" means the Original Indenture as assumed, amended and
restated pursuant to the Amended and Restated Indenture, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms, including supplementing by an Indenture Supplement pursuant thereto.
"Indenture Agreements" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Manufacturer's
Consent, the Bill of Sale and any other contract, agreement or instrument from
time to time assigned or pledged under the Indenture.
"Indenture Default" means an event or a condition that would
constitute an Indenture Event of Default with the passage of time or notice or
both.
"Indenture Estate" means all estate, right, title and interest of
Loan Trustee in and to the properties referred to in the Granting Clause of the
Indenture, excluding Excluded Payments.
"Indenture Event of Default" has the meaning specified in Section
4.02 of the Indenture.
"Indenture Indemnitee" means (i) Loan Trustee, (ii) State Street,
(iii) so long as it holds any Equipment Note as agent and trustee of any Pass
Through Trustee, Subordination Agent, (iv) Liquidity Provider and Policy
Provider and (v) so long as it is the holder of any Equipment Notes, each Pass
Through Trustee and each of their respective directors, officers, employees,
agents and servants. No holder of a Pass Through Certificate in its capacity as
such shall be an Indenture Indemnitee.
"Indenture Supplement" means a supplement to the Indenture,
substantially in the form of Exhibit A to the Indenture, which particularly
describes the Aircraft, and any Replacement Airframe and or Replacement Engine
included in the property subject to the Lien of the Indenture.
["Initial Installment" has the meaning specified in Section 19(d) of
the Lease.]
"Intercreditor Agreement" means that certain Intercreditor
Agreement, dated as of April 30, 2002, among Pass Through Trustees, Liquidity
Provider, Policy Provider and Subordination Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Interests" has the meaning specified in Section 11(a) of the Lease.
"Lease" or "Lease Agreement" means that certain Lease Agreement
(N[_____]), dated as of [___________, ____], between Lessor and Lessee, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms and in accordance with the Indenture, including,
without limitation, supplementation thereof by one or more Lease Supplements
entered into pursuant to the applicable provisions thereof.
"Lease Default" means any event which with the giving of notice or
the lapse of time or both would become an Event of Default.
"Lease Event of Default" has the meaning set forth under the
definition of "Event of Default".
"Lease Period" means each of the consecutive periods throughout the
Basic Term and any Renewal Term ending on a Lease Period Date, the first such
period commencing on and including the Delivery Date.
"Lease Period Date" means [___________, ____] and each succeeding
January 2 and July 2, to and including the last such date in the Term.
"Lease Supplement" means a Lease Supplement, substantially in the
form of Exhibit A to the Lease, to be entered into between Lessor and Lessee on
the Delivery Date for the purpose of leasing the Aircraft under and pursuant to
the terms of the Lease, and any subsequent Lease Supplement entered into in
accordance with the terms of the Lease.
"Lessee" means Delta Air Lines, Inc., a Delaware corporation, and
its successors and permitted assigns.
"Lessor" means Owner Trustee.
"Lessor Liens" means any Lien or disposition of title or interest
arising as a result of (i) claims against Lessor, Wells Fargo Bank Northwest,
National Association, in its individual capacity, or Owner Participant not
related to the transactions contemplated by the Operative Documents, (ii) any
act or omission of Owner Participant, Lessor, or Wells Fargo Bank Northwest,
National Association, in its individual capacity, which is not related to the
transactions contemplated by the Operative Documents or is in violation of any
of the terms of the Operative Documents, (iii) claims against Owner Participant,
Lessor, or Wells Fargo Bank Northwest, National Association, in its individual
capacity, with respect to Taxes or Claims against which Lessee is not required
to indemnify Owner Participant, Lessor or Wells Fargo Bank Northwest, National
Association, in its individual capacity, pursuant to Section 4.02 and Section
4.03 of the Participation Agreement or (iv) claims against Lessor or Owner
Participant arising out of any transfer by Lessor or Owner Participant of all or
any portion of the respective interests of Lessor or Owner Participant in the
Aircraft, the Trust Estate or the Operative Documents other than the transfer of
possession of the Aircraft by Lessor pursuant to the Lease, the transfer
pursuant to the Indenture or a transfer of the Aircraft pursuant to Section 9,
10 or 19 of the Lease or pursuant to the exercise of the remedies set forth in
Section 15 of the Lease, provided, however, that any Lien which is attributable
solely to Wells Fargo Bank Northwest, National Association or Owner Participant
and would otherwise constitute a Lessor Lien hereunder shall not constitute a
Lessor Lien hereunder so long as (1) the existence of such Lien poses no
material risk of the sale, forfeiture or loss of the Aircraft, (2) the existence
of such Lien does not interfere in any way with the use, possession, operation,
or quiet enjoyment of the Aircraft by Lessee (or any Permitted Sublessee), (3)
the existence of such Lien does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Indenture, (4) Wells Fargo Bank Northwest,
National Association or Owner Participant, as appropriate, is diligently
contesting such Lien and (5) the existence of such Lien does not pose a material
threat of interference with the payment of Rent (other than Excluded Payments in
favor of Wells Fargo Bank Northwest, National Association or Owner Participant,
as appropriate).
"Lessor's Cost" for the Aircraft means the amount denominated as
such in Exhibit B-1 to the Lease.
"Lien" means any mortgage, pledge, lien, encumbrance, lease,
sublease, sub-sublease or security interest.
"Liquidity Facilities" means the three Revolving Credit Agreements,
each dated as of April 30, 2002, between Subordination Agent, as borrower, and
Liquidity Provider, and any replacements thereof, in each case as the same may
be amended or supplemented or otherwise modified from time to time in accordance
with its terms.
"Liquidity Provider" means Westdeutsche Landesbank Girozentrale, a
German banking institution organized under the laws of the State of North
Rhine-Westphalia, acting through its New York branch, as liquidity provider
under each of the Liquidity Facilities, or any liquidity provider under a
replacement liquidity facility.
"Loan Trustee" has the meaning specified in the introductory
paragraph of the Indenture.
"Loan Trustee Event" means either (i) the Equipment Notes have
become due and payable pursuant to Section 4.04(b) of the Indenture or (ii) Loan
Trustee has taken action or notified Owner Trustee that it intends to take
action to foreclose the Lien of the Indenture or otherwise commence the exercise
of any significant remedy under the Indenture or the Lease.
"Loan Trustee Liens" means any Lien attributable to State Street or
Loan Trustee with respect to the Aircraft, any interest therein or any other
portion of the Indenture Estate arising as a result of (i) claims against State
Street or Loan Trustee not related to its interest in the Aircraft or the
administration of the Indenture Estate pursuant to the Indenture, (ii) acts of
State Street or Loan Trustee not permitted by, or the failure of State Street or
Loan Trustee to take any action required by the Operative Documents or the Pass
Through Documents, (iii) claims against State Street or Loan Trustee relating to
Taxes or Claims that are excluded from the indemnification provided by Section
4.02 and Section 4.03 of the Participation Agreement pursuant thereto or (iv)
claims against State Street or Loan Trustee arising out of the transfer by any
such party of all or any portion of its interest in the Aircraft, the Indenture
Estate, the Operative Documents or the Pass Through Documents, except a transfer
of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V
of the Indenture, or a transfer of the Aircraft pursuant to Section 15 of the
Lease while an Event of Default is continuing and prior to the time that Loan
Trustee has received all amounts due to it pursuant to the Indenture.
"Loss Payment Date" has the meaning specified in Section 10(a) of
the Lease.
"Majority in Interest of Noteholders" means, as of a particular date
of determination and subject to Section 2.16 of the Indenture, the holders of at
least a majority in aggregate unpaid principal amount of all Equipment Notes
outstanding as of such date (excluding any Equipment Notes held by Owner Trustee
or Owner Participant or any interests of Owner Participant therein by reason of
subrogation pursuant to Section 4.03 of the Indenture (unless all Equipment
Notes then outstanding are held by Owner Trustee or Owner Participant) or Lessee
or any affiliate of any thereof).
"Make-Whole Amount" means, with respect to any Equipment Note, the
amount (as determined by an independent investment banker selected by Lessee
(and, following the occurrence and during the continuance of an Event of
Default, reasonably acceptable to Loan Trustee and Owner Participant)), if any,
by which (i) the present value of the remaining scheduled payments of principal
and interest from the redemption date to maturity of such Equipment Note
computed by discounting each such payment on a semiannual basis from its
respective Payment Date (assuming a 360-day year of twelve 30 day months) using
a discount rate equal to the Treasury Yield exceeds (ii) the outstanding
principal amount of such Equipment Note plus accrued but unpaid interest
thereon. For purposes of determining the Make-Whole Amount, "Treasury Yield"
means, at the date of determination, the interest rate (expressed as a
semiannual equivalent and as a decimal and, in the case of United States
Treasury bills, converted to a bond equivalent yield) determined to be the per
annum rate equal to the semiannual yield to maturity for United States Treasury
securities maturing on the Average Life Date and trading in the public
securities market either as determined by interpolation between the most recent
weekly average yield to maturity for two series of United States Treasury
securities, trading in the public securities markets, (A) one maturing as close
as possible to, but earlier than, the Average Life Date and (B) the other
maturing as close as possible to, but later than, the Average Life Date, in each
case as published in the most recent H.15(519) or, if a weekly average yield to
maturity for United States Treasury securities maturing on the Average Life Date
is reported on the most recent H.15(519), such weekly average yield to maturity
as published in such H.15(519). "H.15(519)" means the weekly statistical release
designated as such, or any successor publication, published by the Board of
Governors of the Federal Reserve System. The date of determination of a
Make-Whole Amount shall be the third Business Day prior to the applicable
redemption date and the "most recent H.15(519)" means the H.15(519) published
prior to the close of business on the third Business Day prior to the applicable
redemption date. "Average Life Date" means, for each Equipment Note to be
redeemed, the date which follows the redemption date by a period equal to the
Remaining Weighted Average Life at the redemption date of such Equipment Note.
"Remaining Weighted Average Life" of an Equipment Note, at the redemption date
of such Equipment Note, means the number of days equal to the quotient obtained
by dividing: (i) the sum of the products obtained by multiplying (A) the amount
of each then remaining installment of principal, including the payment due on
the maturity date of such Equipment Note, by (B) the number of days from and
including the redemption date to but excluding the scheduled payment date of
such principal installment by (ii) the then unpaid principal amount of such
Equipment Note.
"Manufacturer" means The Boeing Company, a Delaware corporation, and
its successors and assigns.
"Manufacturer's Consent" means the Manufacturer's Consent and
Agreement to Assignment of Warranties, dated as of the Delivery Date, executed
by Manufacturer, as the same may be amended, modified or supplemented from time
to time in accordance with its terms.
"Net Economic Return" has the meaning specified in paragraph 2 of
Exhibit E to the Lease.
"Net Present Value of Rents" means the net present value, as of the
Delivery Date, of Basic Rent set forth in Exhibit B-1 to the Lease, discounted
at an annual rate of 8 percent on a semi-annual basis.
"Noteholder" means any Person in whose name an Equipment Note is
registered on the Equipment Note Register (including, for so long as it is the
registered holder of any Equipment Notes, Subordination Agent on behalf of Pass
Through Trustees pursuant to the provisions of the Intercreditor Agreement).
"Noteholder Liens" means any Lien attributable to any Noteholder on
or against the Aircraft, any interest herein or any portion of the Collateral,
arising out of any claim against such Noteholder that is not related to the
Operative Documents or Pass Through Documents, or out of any act or omission of
such Noteholder that is not related to the transactions contemplated by, or that
constitutes a breach by such Noteholder of its obligations under, the Operative
Documents or the Pass Through Documents.
"Operative Documents" means, collectively, the Participation
Agreement, the Lease, the Lease Supplement covering the Aircraft, the Indenture,
the Indenture Supplement covering the Aircraft, the Trust Agreement, the Tax
Indemnity Agreement, the Bill of Sale, the FAA Bill of Sale, the Purchase
Agreement Assignment, the Manufacturer's Consent and the Equipment Notes.
"Original Closing Date" means April 30, 2002.
"Original Documents" means the Original Participation Agreement, the
Original Indenture and the Original Equipment Notes.
"Original Equipment Notes" means the equipment notes, dated April
30, 2002, issued by Lessee pursuant to the Original Indenture on the Original
Closing Date to Subordination Agent on behalf of Pass Through Trustee for each
of the Pass Through Trusts.
"Original Indenture" means the Indenture and Security Agreement
(N[_____]), dated as of April 30, 2002, between Lessee and Loan Trustee, as such
Indenture and Security Agreement may have been amended or supplemented from time
to time pursuant to the applicable provisions thereof prior to the execution and
delivery of the Amended and Restated Indenture.
"Original Participation Agreement" means that certain Participation
Agreement (N[_____]), dated as of April 30, 2002, among Lessee, Pass Through
Trustees, Loan Trustee and Subordination Agent, as such Participation Agreement
may have been amended or supplemented from time to time pursuant to the
applicable provisions thereof prior to the execution and delivery of the
Participation Agreement.
"Other Party Liens" means any Lien attributable to Pass Through
Trustee (other than in its capacity as Noteholder), Subordination Agent (other
than in its capacity as Noteholder), Liquidity Provider or Policy Provider on or
against the Aircraft, any interest therein, or any portion of the Collateral
arising out of any claim against such party that is not related to the Operative
Documents or Pass Through Documents, or out of any act or omission of such party
that is not related to the transactions contemplated by, or that constitutes a
breach by such party of its obligations under, the Operative Documents or the
Pass Through Documents.
"Overall Transaction" means all the transactions contemplated by the
Operative Documents.
"Owner Indemnitee" has the meaning specified in the definition of
Excluded Payments.
"Owner Participant" means the corporation executing the
Participation Agreement as Owner Participant, and thereafter any Person to which
such corporation transfers all of its right, title and interest in and to the
Trust Agreement, the Trust Estate and the Participation Agreement, to the extent
permitted by Section 8.01 of the Trust Agreement and Section 6.01(n) of the
Participation Agreement.
"Owner Trustee" means the entity executing the Participation
Agreement as Owner Trustee and any entity appointed as successor Owner Trustee
pursuant to Section 9.01 of the Trust Agreement, and references to a predecessor
Owner Trustee in its individual capacity by name in the Operative Documents
shall include such successor Owner Trustee in its individual capacity from and
after such succession.
"Participants" means and includes Pass Through Trustees and Owner
Participant.
"Participation Agreement" has the meaning set forth under the
definition of "Agreement".
"Parts" means any and all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than (a) complete Engines or engines, (b) any items leased by Lessee or
any Permitted Sublessee, (c) cargo containers, (d) components or systems
installed on or affixed to the Airframe that are used to provide individual
telecommunications or electronic entertainment to passengers aboard the
Aircraft, (e) medical and similar emergency equipment and (f) passenger service
items and equipment generally used in but not affixed to the Aircraft, such as
blankets, coffee pots, beverage and meal servicing carts, etc.), so long as the
same are incorporated or installed in or attached to the Airframe or any Engine
or so long as title thereto remains vested in Lessor in accordance with the
terms of Section 8 of the Lease after removal from the Airframe or any Engine.
"Pass Through Certificates" means the pass through certificates
issued by Pass Through Trustees.
"Pass Through Documents" means the Pass Through Trust Agreements,
the Intercreditor Agreement, the Liquidity Facilities and the Policy Provider
Agreement.
"Pass Through Trust" means each of the three separate grantor trusts
created pursuant to the Pass Through Trust Agreements to facilitate certain of
the transactions contemplated by the Operative Documents.
"Pass Through Trust Agreement" means each of the three separate
Trust Supplements together in each case with the Basic Pass Through Trust
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Pass Through Trustee" has the meaning specified in the introductory
paragraph to the Participation Agreement.
"Pass Through Trustees" means, collectively, Pass Through Trustees
under each Pass Through Trust Agreement.
"Past Due Rate" means, (i) with respect to the portion of any
payment of Rent that may be required by the Indenture to be paid by Loan Trustee
to Noteholders as principal or interest with respect to a particular Series, a
rate per annum equal to the applicable Debt Rate plus 1% and (ii) with respect
to the remaining portion of any payment of Rent (and the entire amount of any
payment of Rent after the satisfaction and discharge of the Indenture), a rate
per annum equal to the Debt Rate for the Series G-2 Equipment Notes plus 1%.
"Payment Date" means, for any Equipment Note, each July 2 and
January 2, commencing with [______________].
"Payment Default" means the occurrence of an event that would give
rise to an Event of Default under Section 14(a) of the Lease upon the giving of
notice or the passing of time or both.
"Permitted Investments" means each of (a) direct obligations of the
United States and agencies thereof; (b) obligations fully guaranteed by the
United States; (c) certificates of deposit issued by, or bankers' acceptances
of, or time deposits with, any bank, trust company or national banking
association incorporated or doing business under the laws of the United States
or one of the states thereof having combined capital and surplus and retained
earnings of at least $100,000,000 and having a rating of A, its equivalent or
better by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P") (or, if
neither such organization then rates such institutions, by any nationally
recognized rating organization in the United States); (d) commercial paper of
any holding company of a bank, trust company or national banking association
described in clause (c); (e) commercial paper of companies having a rating
assigned to such commercial paper by either Moody's or S&P (or, if neither such
organization then rates such commercial paper, by any nationally recognized
rating organization in the United States) equal to either of the two highest
ratings assigned by such organization; (f) Dollar-denominated certificates of
deposit issued by, or time deposits with, the European subsidiaries of (i) any
bank, trust company or national banking association described in clause (c), or
(ii) any other bank or financial institution described in clause (h) or (i)
below; (g) United States-issued Yankee certificates of deposit issued by, or
bankers' acceptances of, or commercial paper issued by, any bank having combined
capital and surplus and retained earnings of at least $100,000,000 and
headquartered in Canada, Japan, the United Kingdom, France, Germany, Switzerland
or The Netherlands and having a rating of A, its equivalent or better by Moody's
or S&P (or, if neither such organization then rates such institutions, by any
nationally recognized rating organization in the United States); (h)
Dollar-denominated time deposits with any Canadian bank having a combined
capital and surplus and retained earnings of at least $100,000,000 and having a
rating of A, its equivalent or better by Moody's or S&P (or, if neither such
organization then rates such institutions, by any nationally recognized rating
organization in the United States); (i) Canadian Treasury Bills fully hedged to
Dollars; (j) repurchase agreements with any financial institution having
combined capital and surplus and retained earnings of at least $100,000,000
collateralized by transfer of possession of any of the obligations described in
clauses (a) through (i) above; (k) bonds, notes or other obligations of any
state of the United States, or any political subdivision of any state, or any
agencies or other instrumentalities of any such state, including, but not
limited to, industrial development bonds, pollution control revenue bonds,
public power bonds, housing bonds, other revenue bonds or any general obligation
bonds, that, at the time of their purchase, such obligations are rated A, its
equivalent or better by Moody's or S&P (or, if neither such organization then
rates such obligations, by any nationally recognized rating organization in the
United States); (1) bonds or other debt instruments of any company, if such
bonds or other debt instruments, at the time of their purchase, are rated A, its
equivalent or better by Moody's or S&P (or, if neither such organization then
rates such obligations, by any nationally recognized rating organization in the
United States); (m) mortgage backed securities (i) guaranteed by the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation or the
Government National Mortgage Association or rated AAA, its equivalent or better
by Moody's or S&P (or, if neither such organization then rates such obligations,
by any nationally recognized rating organization in the United States) or, if
unrated, deemed to be of a comparable quality by Loan Trustee and (ii) having an
average life not to exceed 15 years as determined by standard industry pricing
practices presently in effect; (n) asset-backed securities rated A, its
equivalent or better by Moody's or S&P (or, if neither such organization then
rates such obligations, by any nationally recognized rating organization in the
United States) or, if unrated, deemed to be of a comparable quality by Loan
Trustee; and (o) such other investments approved in writing by Loan Trustee;
provided that, except in clause (m), the instruments described in the foregoing
clauses shall have a maturity of no more than six months from the date of
acquisition thereof. The bank acting as Pass Through Trustee or Loan Trustee is
hereby authorized, in making or disposing of any investment described herein, to
deal with itself (in its individual capacity) or with any one or more of its
affiliates, whether it or such affiliate is acting as an agent of Pass Through
Trustee or Loan Trustee or for any third person or dealing as principal for its
own account.
"Permitted Lien" has the meaning specified in Section 6 of the
Lease.
"Permitted Sublessee" means any Person to whom Lessee is permitted
to sublease the Airframe or any Engine pursuant to Section 7(a) of the Lease.
"Person" means any person, including any individual, corporation,
limited liability company, partnership, joint venture, association, joint-stock
company, trust, trustee, unincorporated organization or government or any agency
or political subdivision thereof.
"Policy Provider" means MBIA Insurance Corporation, a New
York-domiciled stock insurance company.
"Policy Provider Agreement" means the Insurance and Indemnity
Agreement dated as of April 30, 2002 among Subordination Agent, Class G-1
Trustee, Class G-2 Trustee, Lessee and Policy Provider, including the related
Policy Provider Fee Letter referred to therein, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"Purchase Agreement" means Purchase Agreement No. 2022, dated as of
October 21, 1997, which incorporates by reference the Aircraft General Terms
Agreement AGTA-DAL, dated as of October 21, 1997, between Manufacturer and
Lessee, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.
"Purchase Agreement Assignment" means that certain Purchase
Agreement Assignment (N[_____]), dated as of [_____________, ____], between
Lessee and Owner Trustee, as the same may be amended, modified, supplemented or
modified from time to time in accordance with the terms thereof.
"Rating Agencies" has the meaning specified in the Intercreditor
Agreement.
"Related Indemnitee Group" has the meaning specified in Section
4.03(b) of the Participation Agreement.
["Remaining Installments" has the meaning specified in Section 19(d)
of the Lease.]
"Renewal Term" means any Fair Market Renewal Term or Fixed
Renewal Term.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Replacement Aircraft" means the Aircraft of which a Replacement
Airframe is part.
"Replacement Airframe" means a Boeing 737-832 aircraft or a
comparable or improved model of Manufacturer (except (a) Engines or engines from
time to time installed thereon and any and all Parts related to such Engine or
engines and (b) items excluded from the definition of Parts (except Engines or
engines)), that shall have been made subject to the Lease pursuant to Section
10(a) thereof, together with all Parts relating to such aircraft.
"Replacement Engine" means a CFM International, Inc. CFM56-7B
engine, which may be rated at or limited to -24 or higher power, (or an engine
of the same or another manufacturer of a comparable or an improved model and
suitable for installation and use on the Airframe with the other Engine (or any
other Replacement Engine being substituted simultaneously therewith)) that is
made subject to the Lease pursuant to Section 5(b), Section 9(c) or Section
10(b) thereof, together with all Parts relating to such engine.
"Responsible Officer" means, (a) with respect to Lessee, its
Chairman of the Board, its President, its Chief Operating Officer, any Executive
Vice President, any Senior Vice President, the Chief Financial Officer, any Vice
President, the Treasurer, the Controller or the Secretary, (b) with respect to
Owner Trustee, a responsible officer in the Trust Office of Owner Trustee
(including, without limitation, any authorized officer in the Trust Office of
Owner Trustee), and (c) with respect to Loan Trustee, a responsible officer in
the Corporate Trust Office of Loan Trustee.
"Section 1110" means Section 1110 of the Bankruptcy Code.
"Section 1110 Period" has the meaning specified in Section 4.04(a)
of the Indenture.
"Secured Obligations" has the meaning specified in Section 2.06 of
the Indenture.
"Series" means any series of Equipment Notes, including the Series
G-1 Equipment Notes, the Series G-2 Equipment Notes, or the Series C Equipment
Notes.
"Series C Equipment Notes" means Equipment Notes issued and
designated as "Series C Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule I
to the Indenture under the heading "Series C Equipment Notes."
"Series G-1 Equipment Notes" means Equipment Notes issued and
designated as "Series G-1 Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule I
to the Indenture under the heading "Series G-1 Equipment Notes."
"Series G-2 Equipment Notes" means Equipment Notes issued and
designated as "Series G-2 Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule I
to the Indenture under the heading "Series G-2 Equipment Notes."
"Special Purchase Price" means the amount denominated as such in
Exhibit B-1 to the Lease.
"State Street" has the meaning specified in the introductory
paragraph of the Participation Agreement.
"Stipulated Loss Value" with respect to the Aircraft as of any date
through and including [_____________, ____], means, but subject always to the
provisions of Section 3(c)(iv) of the Lease, the amount determined by
multiplying Lessor's Cost for the Aircraft by the percentage specified in the
last column of Exhibit C to the Lease opposite the Stipulated Loss Value Date
with respect to which the amount is determined (as such Exhibit C may be
adjusted from time to time as provided in Section 3(c) of the Lease and in
Section 7 of the Tax Indemnity Agreement). "Stipulated Loss Value" as of any
date after [______________, ____] shall be the amount determined as provided in
Section 19(a) of the Lease.
"Stipulated Loss Value Date" means the [_____] calendar day of each
calendar month during the Basic Term and any Renewal Term.
"Sublease" means any sublease permitted by the terms of Section 7(a)
of the Lease.
"Subordination Agent" has the meaning specified in the introductory
paragraph of the Participation Agreement.
"Supplemental Rent" means, without duplication, (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent) which Lessee
assumes or agrees to pay under any Operative Document to or on behalf of Lessor
or any other Person, (b) amounts payable by Lessor pursuant to Section 2.14(b),
Section 2.14(c), Section 2.14(d), Section 2.14(e) and Section 2.14(f) of the
Indenture and (c) Lessor's pro rata share of all compensation and reimbursement
of expenses, disbursements and advances payable by Lessee under the Pass Through
Trust Agreements. As used herein, the "Lessor's pro rata share" means as of any
time a fraction, the numerator of which is the principal balance then
outstanding of Equipment Notes and the denominator of which is the aggregate
principal balance then outstanding of all "Series G-1 Equipment Notes", "Series
G-2 Equipment Notes" and "Series C Equipment Notes" (in each case as defined in
the Intercreditor Agreement).
"Tax" and "Taxes" mean all governmental fees (including, without
limitation. license, filing and registration fees) and all taxes (including,
without limitation, franchise, excise, stamp, value added, income, gross
receipts, sales, use and property taxes), withholdings, assessments, levies,
imposts, duties or charges, of any nature whatsoever, together with any related
penalties, fines, additions to tax or interest thereon imposed, withheld, levied
or assessed by any country, taxing authority or governmental subdivision thereof
or therein or by any international authority, including any taxes imposed on any
Person as a result of such Person being required to collect and pay over
withholding taxes.
"Tax Indemnitee" means (i) Owner Participant, Owner Trustee, in its
individual capacity and as trustee under the Trust Agreement, the Trust Estate,
Loan Trustee, each Pass Through Trustee as, but only so long as such Pass
Through Trustee is, the owner of any Equipment Note, Subordination Agent as, but
only so long as it is, the registered holder of any Equipment Note, (ii) the
respective affiliates, successors and permitted assigns of each of the entities
described in the preceding clause (i), and (iii) the Indenture Estate. For
purposes of this definition, the term "Owner Participant" shall include any
member of an affiliated group (within the meaning of Section 1504 of the Code)
of which Owner Participant is a member and any entity with which Owner
Participant files a consolidated or combined state income tax return.
"Tax Indemnity Agreement" means that certain Tax Indemnity Agreement
(N[_____]), dated as of [________________, ____], between Owner Participant and
Lessee, as originally executed or as modified, amended or supplemented pursuant
to the applicable provisions thereof.
"Term" means the Basic Term and, if actually entered into, any
Renewal Term.
"Termination Date" has the meaning set forth in Section 9(a) of the
Lease.
"Termination Value" with respect to the Aircraft as of any date
through and including [______________, ____], means, but subject always to the
provisions of Section 3(c)(iv) of the Lease, the amount determined by
multiplying Lessor's Cost for the Aircraft by the percentage specified in the
last column of Exhibit D of the Lease opposite the Termination Date with respect
to which the amount is determined (as such Exhibit D may be adjusted from time
to time as provided in Section 3(c) of the Lease and in Section 7 of the Tax
Indemnity Agreement).
"Transaction Expenses" means: all of the actual and reasonable
out-of-pocket costs, fees and expenses incurred by Owner Trustee, Owner
Participant, Pass Through Trustee, Subordination Agent and Loan Trustee in
connection with the transactions contemplated by the Participation Agreement,
the other Operative Documents, the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities, the Policy Provider Agreement
and the Underwriting Agreement (except, in each case, as otherwise provided
therein) including, without limitation:
(1) the reasonable and actual fees, expenses and
disbursements of (A) Bingham Dana LLP, special counsel for
Pass Through Trustee, Subordination Agent and Loan Trustee,
(B) Ray, Quinney & Nebeker, special counsel for Owner Trustee
and (C) Shearman & Sterling, special counsel for Underwriters;
(2) the initial fees and reasonable and actual
disbursements of Owner Trustee under the Trust Agreement;
(3) the initial fee and reasonable and actual
disbursements of Loan Trustee under the Indenture;
(4) the pro rata share of the initial fees and expenses
of Liquidity Provider, Policy Provider, Pass Through Trustee
and Subordination Agent;
(5) the pro rata share of the underwriting fees and
commissions;
(6) the fees and expenses with respect to the appraisals
(including a pro rata share of the appraisals relating to the
Pass Through Certificates) of the Aircraft;
(7) the reasonable fees, expenses and disbursements of
[___________________], special counsel to Owner Participant,
such fees not to exceed the amount previously agreed to by
Owner Participant and Lessee;
(8) the costs of filing and recording documents with the
FAA;
(9) the pro rata share of the reasonable fees, expenses
and disbursements of Milbank, Tweed, Hadley & McCloy LLP,
special counsel to Liquidity Provider;
(10) the pro rata share of the reasonable fees, expenses
and disbursements of Latham & Watkins, special counsel to
Policy Provider; and
(11) the equity placement fee and reasonable
disbursements of Babcock and Brown Financial Corporation.
"Transportation Code" means that portion of Title 49 of the United
States Code comprising those provisions formerly referred to as the Federal
Aviation Act of 1958, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
"Trust Agreement" means that certain Trust Agreement [N[_____]),
dated as of [______________, ____], between Owner Participant and Wells Fargo
Bank Northwest, National Association, in its individual capacity, as originally
executed or as modified, amended or supplemented pursuant to the applicable
provisions thereof.
"Trust Estate" means the Trust Estate as that term is defined in the
Trust Agreement.
"Trust Office" has the meaning set forth under the definition of
"Corporate Trust Department".
"Trust Supplements" means those agreements supplemental to the Basic
Pass Through Trust Agreement referred to in Schedule II to the Participation
Agreement.
"Underwriters" means the several underwriters listed as such in the
Underwriting Agreement.
"Underwriting Agreement" means that certain Underwriting Agreement,
dated April [__], 2002, among Lessee and Underwriters.
"United States" means the United States of America.
"U.S. Government Obligations" means securities that are direct
obligations of the United States for the payment of which its full faith and
credit is pledged which are not callable or redeemable, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligations or a specific payment of interest on or
principal of any such U.S. Government Obligations held by such custodian for the
account of the holder of a depository receipt so long as such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligations or the specific payment of interest on or principal
of the U.S. Government Obligations evidenced by such depository receipt.
"Warranty Rights" means all right and interest of Lessee in, to and
under Parts 1, 2, 3, 4 and 6 of the Product Assurance Document attached as
Exhibit C to the Aircraft General Terms Agreement AGTA-DAL, dated as of October
21, 1997, but only to the extent the same relate to continuing rights of Lessee
in respect of any warranty or indemnity, express or implied, pursuant to the
Product Assurance Document with respect to the Airframe, it being understood
that the Warranty Rights exclude any and all other right, title and interest of
Lessee in, to and under the Purchase Agreement and that the Warranty Rights are
subject to the terms of the Manufacturer's Consent.
"Wells Fargo" means Wells Fargo Bank Northwest, National
Association, a national banking association.
EXHIBIT H TO
PARTICIPATION AGREEMENT
FORM OF LEASE AGREEMENT
================================================================================
LEASE AGREEMENT
(N ____)
Dated as of
[_________ ___, 200_]
Between
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
Not in its Individual Capacity, except as expressly
provided herein, but solely as Owner Trustee,
Lessor
AND
DELTA AIR LINES, INC.,
Lessee
One Boeing 737-832 Aircraft
==============================================================================
As set forth in Section 20 hereof, Lessor has assigned to Loan Trustee (as
defined herein) certain of its right, title and interest in and to this Lease.
To the extent, if any, that this Lease constitutes chattel paper (as such term
is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction) no security interest in this Lease may be created through the
transfer or possession of any counterpart other than the original executed
counterpart, which shall be identified as the counterpart containing the receipt
therefor executed by Loan Trustee on the signature page thereof.
TABLE OF CONTENTS
Page
SECTION 1. Definitions....................................................
SECTION 2. Acceptance and Lease...........................................
SECTION 3. Term and Rent..................................................
(a) Basic Term..............................................
(c) Basic Rent..............................................
(d) Adjustments to Basic Rent...............................
(e) Supplemental Rent.......................................
(f) Payments in General.....................................
SECTION 4. Lessor's Representations and Warranties........................
SECTION 5. Return of the Aircraft.........................................
(a) Condition Upon Return...................................
(b) Return of the Engines...................................
(c) Fuel; Manuals...........................................
SECTION 6. Liens..........................................................
SECTION 7. Registration, Maintenance and Operation; Possession and
Subleases; Insignia.......................................
(a) Registration and Maintenance............................
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions...............................
(a) Replacement of Parts....................................
(b) Pooling of Parts........................................
(c) Alterations, Modifications and Additions................
SECTION 9. Voluntary Termination..........................................
(a) Termination Event.......................................
(c) Optional Sale of the Aircraft...........................
(d) Termination as to Engines...............................
SECTION 10. Loss, Destruction, Requisition, etc...........................
(a) Event of Loss with Respect to the Aircraft..............
(b) Event of Loss with Respect to an Engine.................
(f) Application of Payments During Existence of Event of
Default...............................................
SECTION 11. Insurance.....................................................
SECTION 12. Inspection....................................................
SECTION 13. Assignment....................................................
SECTION 14. Events of Default.............................................
SECTION 15. Remedies......................................................
SECTION 16. Lessee's Cooperation Concerning Certain Matters...............
SECTION 17. Notices.......................................................
SECTION 18. No Set-Off, Counterclaim, etc.................................
SECTION 19. Renewal Options; Purchase Options; Valuation..................
(a) Renewal Options.........................................
(b) Purchase Options........................................
(c) Valuation...............................................
(d) Special Purchase Option.................................
SECTION 20. Security for Lessor's Obligation to Holders of Secured
Certificates..............................................
SECTION 21. Lessor's Right to Perform for Lessee..........................
SECTION 22. Investment of Security Funds; Liability of Lessor Limited.....
(a) Investment of Security Funds............................
(b) Liability of Lessor Limited.............................
SECTION 23. Submission to Jurisdiction....................................
SECTION 24. Miscellaneous.................................................
SECTION 25. Successor Trustee.............................................
SECTION 26. Covenant of Quiet Enjoyment...................................
SECTION 27. Lessee's Performance and Rights...............................
ANNEXES AND EXHIBITS
EXHIBIT A - Form of Lease Supplement
EXHIBIT B-1 - Basic Rent Payment, Lessor's Cost and Special Purchase Price
Schedule
EXHIBIT B-2 - Basic Rent Allocation Schedule
EXHIBIT C - Stipulated Loss Value Schedule
EXHIBIT D - Termination Value Schedule
EXHIBIT E - Rent Recalculation Verification
EXHIBIT F - Aircraft Type Equipment Value for Section 11(b)
ANNEX A - Definitions
LEASE AGREEMENT
(N____)
This LEASE AGREEMENT (N____), dated as of [______ __, 200_], between
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual
capacity, except as expressly provided herein, but solely as Owner Trustee under
the Trust Agreement (as defined in Annex A) (in such capacity, "Lessor"), and
DELTA AIR LINES, INC., a corporation organized and existing pursuant to the laws
of the State of Delaware ("Lessee");
W I T N E S S E T H:
SECTION 1. Definitions. (a) For all purposes of this Lease, 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.
(b) Other Definitional Provisions. The definitions stated herein and
in Annex A apply equally to both the singular and the plural forms of the terms
defined.
(i) All references in this Lease 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 Lease, unless otherwise specifically stated.
(ii) The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Lease as a whole and not
to any particular Article, Section, Subsection, Schedule, Exhibit,
Annex or other subdivision.
(iii) 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".
(iv) All references in this Lease to a "government" are
to such government and any instrumentality or agency thereof.
SECTION 2. Acceptance and Lease. Lessor hereby agrees (subject to
satisfaction of the conditions set forth in Section 3.01 of the Participation
Agreement) to accept the transfer of title from and simultaneously to lease to
Lessee hereunder, and Lessee hereby agrees (subject to satisfaction of the
conditions set forth in Section 3.02 of the Participation Agreement) to lease
from Lessor hereunder, the Aircraft as evidenced by the execution by Lessor and
Lessee of a Lease Supplement leasing the Aircraft hereunder. Lessee hereby
agrees that such acceptance of the Aircraft by Lessor shall, without further
act, irrevocably constitute acceptance by Lessee of such Aircraft for all
purposes of this Lease.
SECTION 3. Term and Rent. (a) Basic Term. The Basic Term shall
commence on the Delivery Date and end on [____________ __, 20__], or such
earlier date as this Lease may be terminated in accordance with the provisions
hereof.
(b) Basic Rent. Lessee shall pay Basic Rent on each Lease Period
Date during the Basic Term, in installments, in the amounts specified in Exhibit
B-1. Each such installment of Basic Rent shall be equal to Lessor's Cost
multiplied by the percentage for the applicable Lease Period Date specified in
Exhibit B-1. Lessor and Lessee agree that Basic Rent shall be allocated as
specified in Exhibit B-2.
(c) Adjustments to Basic Rent.
(i) If the Delivery Date does not occur on
[____________________] or Transaction Expenses paid by Lessor
pursuant to Article 12 of the Participation Agreement are other than
[_____]% of Lessor's Cost, then in each case the Basic Rent
percentages set forth in Exhibit B-1, the allocation of Basic Rent
set forth in Exhibit B-2, the Stipulated Loss Value percentages set
forth in Exhibit C, the Termination Value percentages set forth in
Exhibit D[, the Initial Installments, the Remaining Installments]
and the Special Purchase Price shall be recalculated by Owner
Participant, on or prior to [__________________], using the same
methods and assumptions used to calculate original Basic Rent
percentages and allocations, Stipulated Loss Value and Termination
Value percentages[, the Initial Installments, the Remaining
Installments] and the Special Purchase Price in order to: (1)
maintain Owner Participant's Net Economic Return and (2) to the
extent possible consistent with clause (1) hereof, minimize the Net
Present Value of Rents. In such recalculation there will be no
change in the amortization of the Equipment Notes.
(ii) (A) In the event of a refinancing as contemplated by
Article 13 of the Participation Agreement, then the Basic Rent
percentages set forth in Exhibit B-1, the allocation of Basic Rent
set forth in Exhibit B-2, the Stipulated Loss Value percentages set
forth in Exhibit C, the Termination Value percentages set forth in
Exhibit D[, the Initial Installments, the Remaining Installments]
and the Special Purchase Price shall be recalculated (upwards or
downwards) by Owner Participant as contemplated by such Article 13
to (1) maintain Owner Participant's Net Economic Return and (2) to
the extent possible consistent with clause (1) hereof, minimize the
Net Present Value of Rents and (B) if Lessee elects to satisfy any
indemnity obligation pursuant to Section [4(d)(ii)] of the Tax
Indemnity Agreement, then the Basic Rent percentages set forth in
Exhibit B-1, the allocation of Basic Rent set forth in Exhibit B-2,
the Stipulated Loss Value percentages set forth in Exhibit C, the
Termination Value percentages set forth in Exhibit D[, the Initial
Installments, the Remaining Installments] and the Special Purchase
Price shall be recalculated (upwards or downwards) by Owner
Participant, using the same methods and assumptions (except to the
extent such assumptions must be modified to take into account the
Loss (as defined in the Tax Indemnity Agreement) that is the subject
of such indemnification and any prior or contemporaneous Loss) used
to calculate the Basic Rent percentages and allocations, the
Stipulated Loss Value percentages, the Termination Value
percentages[, the Initial Installments, the Remaining Installments]
and the Special Purchase Price on the Delivery Date, in order to (1)
maintain Owner Participant's Net Economic Return and (2) to the
extent possible consistent with clause (1) hereof, minimize the Net
Present Value of Rents.
(iii) Any recalculation of Basic Rent percentages and
allocations, Stipulated Loss Value and Termination Value
percentages[, the Initial Installments, the Remaining Installments]
and the Special Purchase Price pursuant to this Section 3(c) shall
be determined by Owner Participant subject to the verification
procedures set forth in Exhibit E. Such recalculated Basic Rent
percentages and allocations, Stipulated Loss Value and Termination
Value percentages and Special Purchase Price shall be set forth in a
Lease Supplement or an amendment to this Lease.
(iv) Anything contained in the Participation Agreement or this
Lease to the contrary notwithstanding, each installment of Basic
Rent, whether or not adjusted in accordance with this Section 3(c),
shall, and each payment of Termination Value and Stipulated Loss
Value, whether or not adjusted in accordance with this Section 3(c),
shall, together with all other amounts (including the Make-Whole
Amount, if any, payable by Lessor on the Equipment Notes) payable
simultaneously by Lessee pursuant to this Lease, in each case be,
under any circumstances and in any event, in an amount at least
sufficient to pay in full, on the date on which such amount of Rent
is due, any payments then required to be made on account of the
principal of, Make-Whole Amount, if any, and interest on the
Equipment Notes. No installment of Basic Rent or payment of
Termination Value or Stipulated Loss Value shall be increased or
adjusted by reason of (i) any attachment or diversion of Rent on
account of Lessor Liens or any Noteholder Lien on or against the
Trust Estate, any part thereof or the Operative Documents arising as
a result of claims against Loan Trustee not related to the
transactions contemplated by the Operative Documents, (ii) any
modification of the payment terms of the Equipment Notes made
without the prior written consent of Lessee or (iii) the
acceleration of any Equipment Note or Equipment Notes due to the
occurrence of an "Event of Default" (as defined in the Indenture)
which does not constitute an Event of Default hereunder.
(v) All adjustments to Basic Rent percentages and allocations
under this Section 3(c) shall be (A) in compliance with the tests of
ss.ss. 4.02(5) and 4.07 of Rev. Proc. 2001-29 and will not cause
this Lease to constitute a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Internal Revenue
Code of 1986, as amended, as each is then in effect and (B) subject
to verification pursuant to Exhibit E.
(d) Supplemental Rent. Lessee shall pay (or cause to be paid)
promptly to Lessor, or to whoever is entitled thereto, any and all Supplemental
Rent constituting Stipulated Loss Value or Termination Value as the same becomes
due and owing and all other amounts of Supplemental Rent within five (5)
Business Days after demand or within such other relevant period as is provided
in any Operative Document. If Lessee fails to pay any Supplemental Rent when
due, Lessor shall have all rights, powers and remedies provided for herein or in
any other Operative Document or by law or equity or otherwise in the case of
nonpayment of Basic Rent. Lessee shall pay as Supplemental Rent the Make-Whole
Amount, if any, due pursuant to Section 2.10(b) or Section 2.11 of the Indenture
in connection with a prepayment of the Equipment Notes upon redemption of such
Equipment Notes in accordance with Section 2.10(b) or Section 2.11 of the
Indenture. Lessee also will pay to Lessor, or to whoever is entitled thereto, on
demand, as Supplemental Rent, to the extent permitted by applicable law,
interest at the Past Due Rate on any part of any installment of Basic Rent not
paid when due for any period for which the same is overdue and on any payment of
Supplemental Rent not paid when due for the period until paid.
(e) Payments in General. All payments of Rent shall be made in
Dollars by wire transfer of immediately available funds prior to 10:00 a.m., New
York time, on the date of payment, to Lessor at its account at Wells Fargo Bank
Northwest, National Association, MAC: U1254-031, 79 South Main Street, Salt Lake
City, Utah 84111, ABA No. 121-0002-48, Account No. 051-0922115, Attention:
Corporate Trust Department, Credit Delta (N____) (or such other account of
Lessor in the continental United States as Lessor directs by notice to Lessee at
least ten (10) business days prior to the due date); provided that so long as
the Indenture has not been fully discharged, Lessor hereby irrevocably directs
and Lessee agrees, that, unless Loan Trustee otherwise directs, all Rent payable
to Lessor and assigned to Loan Trustee pursuant to the Indenture shall be paid
prior to 10:00 a.m., New York time on the due date thereof in funds of the type
specified in this Section 3(e) directly to Loan Trustee at its account at State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110,
ABA No. 011-000-028, Account No. 9903-990-1, Attention: Corporate Trust
Department, Reference: Delta (N____) (or such other account of Loan Trustee in
the continental United States as Loan Trustee directs by notice to Lessee at
least ten (10) business days prior to the due date). Lessor hereby directs and
Lessee agrees that all payments of Supplemental Rent owing to Loan Trustee or to
a Noteholder pursuant to the Participation Agreement shall be made in Dollars in
immediately available funds prior to 12:00 noon, New York time, on the due date
thereof at the office of Loan Trustee or at such other office of such other
financial institution located in the continental United States as the party
entitled thereto directs at least ten (10) business days prior to the due date.
All payments of Supplemental Rent payable to Owner Participant, to the extent
that such amounts constitute Excluded Payments, shall be made in Dollars in
immediately available funds prior to 10:00 a.m., New York time, on the due date
thereof, to the account of Owner Participant specified in Section 16.12 of the
Participation Agreement (or to such other account specified by Owner Participant
by notice to Lessee).
Notwithstanding anything to the contrary contained herein, if any
date on which a payment of Rent becomes due and payable is not a Business Day,
then such payment shall not be made on such date but shall be made on the next
succeeding Business Day without interest with the same force and effect
(provided such payment is made on such next succeeding Business Day).
SECTION 4. Lessor's Representations and Warranties. LESSOR LEASES
AND LESSEE TAKES THE AIRCRAFT AND EACH PART THEREOF "AS-IS," "WHERE-IS." NEITHER
LESSOR, LOAN TRUSTEE NOR ANY PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO
HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS AND WILL BE DEEMED TO HAVE
EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
THE TITLE, AIRWORTHINESS, WORKMANSHIP, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OR A PARTICULAR PURPOSE OF THE AIRCRAFT OR
ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that Wells Fargo Bank
Northwest, National Association, in its individual capacity, (i) represents and
warrants that on the Delivery Date, Lessor shall have received whatever title to
the Aircraft was conveyed to it by Lessee, (ii) represents and warrants that on
the Delivery Date the Aircraft shall be free of Lessor Liens (including for this
purpose Liens which would be Lessor Liens but for the proviso in the definition
of Lessor Liens) attributable to it, (iii) covenants that it will not, through
its own actions or inactions, interfere in Lessee's quiet enjoyment of the
Aircraft during the Term, (iv) agrees that it will not directly or indirectly
create, incur, assume or suffer to exist any Lessor Lien attributable to it on
or with respect to the Airframe or any Engine or any portion of the Trust Estate
and (v) represents and warrants that it is a Citizen of the United States
without making use of a voting trust, voting powers agreement or similar
arrangement, and agrees that if at any time it ceases to be a Citizen of the
United States without making use of a voting trust, voting powers agreement or
similar arrangement it will promptly resign as Owner Trustee (if and so long as
such citizenship is necessary under the Transportation Code as in effect at such
time or, if it is not necessary, if and so long as Owner Trustee's citizenship
would have any material adverse effect on Noteholders, Owner Participant or
Lessee), effective upon the appointment of a successor Owner Trustee in
accordance with Section 9.01 of the Trust Agreement. None of the provisions of
this Lease shall be deemed to amend, modify or otherwise affect the
representations, warranties or other obligations (express or implied) of
Manufacturer or any subcontractor or supplier of Manufacturer with respect to
the Airframe, the Engines or any Parts, or to release Manufacturer or any such
subcontractor or supplier from any such representation, warranty or obligation.
Lessor agrees that it will not directly or indirectly create, incur, assume or
suffer to exist any Lessor Lien attributable to it on or with respect to the
Airframe or any Engine.
SECTION 5. Return of the Aircraft. (a) Condition Upon Return. Unless
purchased by Lessee pursuant to Section 19, upon the termination of this Lease
at the end of the Basic Term or any Renewal Term or pursuant to Section 9(b) or
15, Lessee, at its own expense, will return the Airframe to Lessor at Hartsfield
Atlanta International Airport or another major airport at which Lessee has major
avionics maintenance capabilities in one of the forty-eight contiguous states of
the United States chosen by Lessee, and Lessee will give Lessor at least ten
(10) days' prior notice of the place of such return. At the time of such return,
the following conditions will be met. Unless otherwise requested by Lessor at
least ninety (90) days prior to such return, Lessee will cause the Aircraft, if
it is not then so registered, to be registered under the laws of the United
States with the FAA in the name of Lessor or its designee, provided that Lessee
shall be relieved of its obligations under this sentence if (i) such
registration is prohibited by reason of the failure of Lessor or its designee to
be eligible on such date to own an aircraft registered with the FAA or (ii) such
registration is otherwise prohibited by applicable law. The Airframe will be
fully equipped with the Engines (or other CFM International, Inc. CFM56-7B
engines or two engines of the same or another manufacturer of a comparable or
improved model, of not less than equivalent utility, value and remaining useful
life, and suitable for installation and use on the Airframe without impairing
the value, utility or remaining useful life of the Aircraft; provided that both
engines shall be of the same make and model) duly installed thereon. Also, at
the time of such return, such Airframe and Engines or engines (i) shall be
certified (or, if not then registered under the Transportation Code, shall be
eligible for certification) as an airworthy aircraft by the FAA, (ii) shall be
free and clear of all Liens (other than Lessor Liens (including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens), Loan Trustee Liens and Noteholder Liens) and rights of third
parties under pooling, interchange, overhaul, repair or other similar agreements
or arrangements, (iii) shall be in good operating condition or, in the case of
any such engines owned by Lessee, shall be in as good operating condition as
required by the terms hereof with respect to Engines constituting part of the
Aircraft but not then installed on the Airframe, and (iv) shall be in compliance
with the return conditions set forth in Exhibit J to the Participation
Agreement.
(b) Return of the Engines. If any engine not owned by Lessor is
returned with the Airframe as set forth in paragraph (a) of this Section 5,
Lessee, concurrently with such delivery, will, at no cost to Lessor, furnish, or
cause to be furnished, to Lessor a full warranty (as to title) bill of sale with
respect to each such engine, in form and substance reasonably satisfactory to
Lessor (together with an opinion of counsel to the effect that such full
warranty bill of sale has been duly authorized and delivered and is enforceable
in accordance with its terms and that such engines are free and clear of Liens
other than Lessor Liens (including for this purpose Liens which would be Lessor
Liens but for the proviso in the definition of Lessor Liens), Loan Trustee Liens
and Noteholder Liens), against receipt from Lessor of a bill of sale evidencing
the transfer, without recourse or warranty (except as to the conveyance of
whatever title was received from Lessee and as to the absence of Lessor Liens,
including for this purpose Liens which would be Lessor Liens but for the proviso
in the definition of Lessor Liens), by Lessor to Lessee or its designee of all
of Lessor's right, title and interest in and to any Engine not being returned
with the Airframe.
(c) Fuel; Manuals. Upon the return of the Airframe pursuant to
paragraph (a) of this Section 5, (i) Lessor shall pay Lessee, as compensation
for any fuel or oil contained in the fuel or oil tanks of such Airframe, the
value of such fuel or oil at the price paid by Lessee for such fuel or oil, as
the case may be, and (ii) Lessee shall deliver or cause to be delivered to
Lessor all relevant logs, manuals and data and inspection, maintenance and
modification records required to be maintained with respect thereto under
applicable rules and regulations of each country under the laws of which the
Aircraft has been registered during the Term, which logs, manuals, data and
records, if not maintained in English, shall be translated into English at no
cost to Lessor.
SECTION 6. Liens. Lessee will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Aircraft,
title thereto or any interest therein or in this Lease, except (i) the
respective rights of Lessor and Lessee as provided in the Operative Documents,
the Lien of the Indenture, the rights of any Permitted Sublessee under a
Sublease permitted hereunder, and the rights of any Person existing pursuant to
the Operative Documents or the Pass Through Documents, (ii) the rights of others
under agreements or arrangements to the extent expressly permitted by this
Lease, (iii) Lessor Liens (including for this purpose Liens which would be
Lessor Liens but for the proviso in the definition of Lessor Liens), Noteholder
Liens, Loan Trustee Liens and Other Party Liens, (iv) Liens for Taxes either not
yet due or being contested in good faith by appropriate proceedings so long as
such proceedings do not involve any material risk of the sale, forfeiture or
loss of the Airframe or any Engine or Lessor's or Loan Trustee's interest
therein, or, so long as any Equipment Notes are outstanding, materially impair
the Lien of the Indenture, (v) 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 sixty (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
Lessor's or Loan Trustee's interest therein or, so long as any Equipment Notes
are outstanding, materially impair the Lien of the Indenture, (vi) Liens arising
out of any judgment or award, so long as such judgment is, within sixty (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 sixty (60) days after the expiration of such stay, (vii) any
other Lien with respect to which Lessee provides a bond, cash collateral or
other security adequate in the reasonable opinion of Lessor, (viii) salvage or
similar rights of insurers under insurance policies maintained by Lessee, and
(ix) Liens approved in writing by Lessor. Liens described in clauses (i) through
(ix) above are referred to as "Permitted Liens". Lessee 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 that
arises at any time.
SECTION 7. Possession, Operation and Use, Maintenance and
Registration. (a) Possession. Without the prior written consent of Lessor,
Lessee shall not sublease 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, as long as the action to be taken shall not deprive Loan Trustee
of the perfected first priority Lien of the Indenture on the Airframe or
(subject to the further proviso (B) to clause (i) of this Section 7(a)) any
Engine, Lessee (or, except with respect to clauses (viii) and (ix) below, any
Permitted Sublessee) may without the prior written consent of Lessor:
(i) subject the Airframe to interchange agreements or
subject any Engine to interchange or pooling agreements or
arrangements, in each case entered into by Lessee (or, if a Sublease
is then in effect, by the Permitted Sublessee) in the ordinary
course of its business; provided that (A) no such agreement or
arrangement contemplates or requires the transfer of title to the
Airframe and (B) if Lessor's title to any such Engine is divested
under any such agreement or arrangement, such divestiture shall be
deemed to be an Event of Loss with respect to such Engine, and
Lessee shall comply with Section 10(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) for a period not to extend beyond the end of the
Term, transfer or permit the transfer of possession of the Airframe
or any Engine to any Government pursuant to a sublease, contract or
other instrument;
(iv) subject (or permit any Permitted Sublessee to
subject) the Airframe or any Engine to the CRAF Program or transfer
(or permit any Permitted Sublessee 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 Lessee (or any Permitted Sublessee) (A)
shall promptly notify Lessor 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 Lessor 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 Lessee (or
any Permitted Sublessee) 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 Lessee
(or any Permitted Sublessee) or purchased or owned by Lessee (or any
Permitted Sublessee) 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(a); and (B) either: (1) Lessee 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 Lessor (an agreement from such lessor or secured
party substantially in the form of the penultimate paragraph of this
Section 7(a) being deemed to be satisfactory to Lessor), 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 this
Lease, or (2) such lease, conditional sale or other security
agreement provides that such Engine shall not become subject to the
Lien of such lease, conditional sale or other security agreement at
any time while such Engine is subject to this Lease, notwithstanding
its installation on such airframe;
(vii) install an Engine on an airframe owned by Lessee
(or any Permitted Sublessee), leased to Lessee (or any Permitted
Sublessee) or purchased by Lessee (or any Permitted Sublessee)
subject to a conditional sale or other security agreement under
circumstances where neither clause (v) nor clause (vi) of this
Section 7(a) is applicable; provided that such installation shall be
deemed an Event of Loss with respect to such Engine, and Lessee
shall comply with Section 10(b) in respect thereof, if such
installation adversely affects Lessor's right and interest in, such
Engine, Lessor not intending hereby to waive any right or interest
it may have to or in such Engine under applicable law until
compliance by Lessee with Section 10(b);
(viii) sublease any Engine or the Airframe and Engines
to any United States air carrier as to which there is in force a
certificate issued pursuant to the Transportation Code (49 U.S.C.
Sections 41101-41112) or successor provision that gives like
authority; and
(ix) sublease 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 I to
the Participation Agreement, (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 Lessor, which consent
shall not be unreasonably withheld; provided that (x) in the case of
a sublease to a foreign air carrier under clause (A) above, Lessor
receives at the time of such sublease (1) written confirmation from
each of the Rating Agencies that such sublease 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 Lessee (such counsel to be reasonably satisfactory to
Lessor) to the effect that there exist no possessory rights in favor
of the sublessee under the laws of such sublessee's country which
would, upon bankruptcy or insolvency of or other default by Lessee
and assuming at such time such sublessee is not insolvent or
bankrupt, prevent the taking of possession of any such Engine or the
Airframe and any such Engine by Lessor in accordance with and when
permitted by the terms of Section 15 upon the exercise by Lessor of
its remedies under Section 15, (y) in the case of a sublease to any
foreign air carrier (other than a foreign air carrier principally
based in Taiwan), the United States maintains diplomatic relations
with the country in which such foreign air carrier is based at the
time such sublease is entered into and (z) in the case of any
sublease 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 sublessee or other transferee who receives
possession of the Aircraft, the Airframe or any Engine by reason of a transfer
permitted by this Section 7(a) (other than the transfer of an Engine which is
deemed an Event of Loss) shall be subject and subordinate to, and any permitted
sublease shall be made expressly subject and subordinate to, all the terms of
this Lease and the Lien of the Indenture, including Lessor's rights to repossess
pursuant to Section 15 and to avoid such sublease upon such repossession, and
Lessee shall remain primarily liable hereunder for the performance and
observance of all of the terms and conditions of this Lease to the same extent
as if such sublease or transfer had not occurred, any such sublease 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(e) or the maintenance, operation or use thereof that does not comply with
Section 7(b) and (c) or (y) permit any action not permitted to be taken by
Lessee with respect to the Aircraft hereunder. Lessee shall promptly notify
Lessor and the Rating Agencies of the existence of any such sublease with a term
in excess of one year.
Lessor agrees, for the benefit of Lessee (and any Permitted
Sublessee) and for the benefit of the lessor or secured party of any airframe or
engine leased to Lessee (or any Permitted Sublessee) or purchased or owned by
Lessee (or any Permitted Sublessee) subject to a conditional sale or other
security agreement, that none of Lessor, its successors or assigns will acquire
or claim, as against Lessee (or any Permitted Sublessee) or such lessor or
secured party, any right, title or interest in: (A) any engine or engines owned
by Lessee (or any Permitted Sublessee) 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 Lessee (or
any Permitted Sublessee) 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.
Lessor acknowledges that any "wet lease" or other similar
arrangement under which Lessee (or a Permitted Sublessee) maintains operational
control of the Aircraft does not constitute a delivery, transfer or
relinquishment of possession for purposes of this Section 7(a).
(b) Operation and Use. Lessee agrees that the Aircraft will not be
maintained, used or operated in violation of any law, rule or regulation of any
government of any country having jurisdiction over the Aircraft or in violation
of any airworthiness certificate, license or registration relating to the
Aircraft issued by any such government, except to the extent Lessee (or, if a
Sublease is then in effect, any Permitted Sublessee) is contesting in good faith
the validity or application of any such law, rule or regulation in any manner
that does not involve any material risk of sale, forfeiture or loss of the
Aircraft or materially adversely affect Lessor or, if any Equipment Notes are
outstanding, materially impair the Lien of the Indenture; provided, that Lessee
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). Lessee 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 11 or (ii) in any war zone or recognized or, in
Lessee's judgment, threatened areas of hostilities unless covered by war risk
insurance in accordance with Section 11, unless in the case of either clause (i)
or (ii), (x) indemnification complying with Section 11 (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 Lessee is using
its good faith efforts to remove the Aircraft from such area as promptly as
practicable.
(c) Maintenance. Lessee shall maintain, service and repair the
Aircraft (or cause the same to be done) so as to keep the Aircraft in good
operating condition and in such condition as may be necessary to enable the
airworthiness certification of the Aircraft to be maintained in good standing at
all times (other than during temporary periods of storage, during maintenance,
testing or modification permitted hereunder, or during periods of grounding by
applicable governmental authorities) under the Transportation Code, during such
periods in which the Aircraft is registered under the laws of the United States,
or, if the Aircraft is registered under the laws of any other jurisdiction, the
applicable laws of such jurisdiction and utilizing the same manner and standard
of care used by Lessee (or a Permitted Sublessee) with respect to similar
aircraft operated by Lessee (or such Permitted Sublessee). 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. Lessee 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) Insignia. Lessee agrees to affix as promptly as practicable
after the Delivery 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:
Leased From
Wells Fargo Bank Northwest, National Association, as Owner Trustee and Lessor,
and, for so long as the Airframe and each Engine are subject to the Lien of the
Indenture, bearing the following additional inscription:
Mortgaged To
State Street Bank and Trust Company of Connecticut, National Association, as
Loan Trustee
(such nameplate to be replaced, if necessary, with a nameplate reflecting the
name of any successor Lessor or successor Loan Trustee). Except as above
provided, Lessee will not allow the name of any Person to be placed on the
Airframe or on any Engine as a designation that might be interpreted as a claim
of ownership; provided that nothing in this Section 7(d) shall prohibit Lessee
(or any Permitted Sublessee) from placing appropriate lettering, painting and
markings (including its customary colors and insignia, and those of any
code-sharing partner) on the Airframe or on any Engine.
(e) Registration. Lessee shall, forthwith upon delivery of the
Aircraft hereunder, cause the Aircraft to be duly registered in the name of
Lessor and, subject to the next sentence and Subsection 6.01(f) of the
Participation Agreement, remain duly registered, under the laws of the United
States in the name of Lessor except as otherwise required by the Transportation
Code; provided that Lessor shall, at Lessee's expense, execute and deliver all
such documents as Lessee reasonably requests for the purpose of effecting and
continuing such registration, and shall not register the Aircraft or permit the
Aircraft to be registered under any laws other than the United States at any
time except as provided in Section 6.01(f) of the Participation Agreement and
shall cause the Indenture to be duly recorded and maintained of record as a
first mortgage on the Aircraft. Lessor, upon compliance with all of the terms of
Section 6.01(f) of the Participation Agreement, shall, at the request and sole
expense of Lessee, cooperate with Lessee to take all actions required to change
the registration of the Aircraft to another country.
SECTION 8. Replacement and Pooling of Parts; Alterations,
Modifications and Additions. (a) Replacement of Parts. Lessee 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 8(c) or if
the Airframe or an Engine to which a Part relates has suffered an Event of Loss.
In addition, Lessee (or any Permitted Sublessee) 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 Lessee (or any
Permitted Sublessee), except as otherwise provided in Section 8(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 8(c), any Parts removed from the
Airframe or any Engine shall remain property of Lessor no matter where located
until it is replaced by a part incorporated or installed in or attached to the
Airframe or such Engine that meets the requirements for replacement Parts
specified above. Immediately upon any replacement Part becoming incorporated or
installed in or attached to the Airframe or any Engine as above provided (except
in the case of replacement property temporarily installed on an emergency
basis), without further act, (i) title to such replacement Part shall thereupon
vest in Lessor, (ii) such replacement Part shall become subject to this Lease
and be deemed part of the Airframe or such Engine for all purposes hereof to the
same extent as the Parts originally incorporated or installed in or attached to
the Airframe or such Engine, and (iii) title to the replaced Part shall
thereupon vest in Lessee (or, if a Sublease is then in effect, any Permitted
Sublessee), free and clear of all rights of Lessor, and shall no longer be
deemed a Part hereunder.
(b) Pooling of Parts. Any Part removed from the Airframe or any
Engine as provided in Section 8(a) may be subjected by Lessee or any Person
permitted to be in possession of the Aircraft to a pooling arrangement entered
into in the ordinary course of Lessee'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 8(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 Lessee, at its expense, as promptly thereafter as
practicable either (i) causes title to such replacement Part to vest in Lessor
by Lessee (or any such Person) acquiring title thereto for the benefit of, and
transferring such title to, Lessor 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 owned by
Lessee (or any such Person) free and clear of all Liens except Permitted Liens
and by causing title to such further replacement Part to vest in Lessor in the
manner contemplated by Section 8(a).
(c) Alterations, Modifications and Additions. Lessee 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
Lessee (or, if a Sublease is then in effect, any Permitted Sublessee) may, in
good faith, contest the validity or application of any such requirement in any
manner that does not involve any material risk of sale, loss or forfeiture of
the Aircraft and does not materially adversely affect Lessor or, so long as any
Equipment Notes are outstanding, Loan Trustee. In addition, Lessee (or any
Permitted Sublessee), 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 Lessee (or any
Permitted Sublessee) 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 Lease, 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 Lessee deems obsolete or no longer suitable or appropriate for use
on the Airframe or any Engine. Title to 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, vest in Lessor.
Notwithstanding the foregoing, Lessee (or any Permitted Sublessee) may, at any
time, remove any Part from the Airframe or any Engine if such Part: (i) is in
addition to, and not in replacement of or substitution for, any Part originally
incorporated or installed in or attached to the Airframe or such Engine at the
time of delivery thereof hereunder or any Part in replacement of, or
substitution for, any such Part, (ii) is not required to be incorporated or
installed in or attached or added to the Airframe or such Engine pursuant to the
first sentence of this Section 8(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 Lease that the Airframe or such Engine would
have had at such time had such removal not occurred. Upon the removal by Lessee
(or any Permitted Lessee) of any Part as permitted by this Section 8(c), title
to such removed Part shall, without further act, vest in Lessee (or any
Permitted Sublessee) and such Part shall no longer be deemed a Part hereunder.
Any Part not removed by Lessee (or any Permitted Sublessee) as above provided
prior to the return of the Airframe or Engine to Lessor hereunder shall remain
the property of Lessor.
SECTION 9. Voluntary Termination. (a) Termination Event. (1) Lessee
may terminate this Lease on any Lease Period Date occurring on or after the
fifth anniversary of the Delivery Date if Lessee has determined, as evidenced by
a certificate from a Responsible Officer of Lessee, that the Aircraft is
obsolete or surplus to its needs.
(2) Lessee shall give Lessor at least ninety (90) days' revocable
advance written notice of Lessee's intention to so terminate this Lease (any
such notice, a "Termination Notice") specifying the Lease Period Date on which
Lessee intends to terminate this Lease in accordance with this Section 9 (such
specified date, a "Termination Date"). Any Termination Notice shall become
irrevocable if not revoked at least fifteen (15) days prior to the Termination
Date.
(b) Optional Sale of the Aircraft. If Lessee has so provided a
Termination Notice, then during the period from the giving of such notice until
the proposed Termination Date (unless Lessee has revoked the Termination Notice
specifying such proposed Termination Date), Lessee, as agent for Lessor and at
no expense to Lessor, shall use commercially reasonable efforts to obtain in the
worldwide market all-cash bids for the purchase of the Aircraft. If it receives
any bid, Lessee shall, within five Business Days after receipt thereof and at
least ten Business Days prior to the proposed Termination Date, certify to
Lessor in writing the amount and terms of each such bid, and the name and
address of the party or parties (who shall not be Lessee or any affiliate of
Lessee or any Person with whom Lessee or any such affiliate has an arrangement
or understanding regarding the future use of the Aircraft by Lessee or any such
affiliate but who may be Owner Participant, any affiliate thereof or any Person
contacted by Owner Participant) submitting such bid. After Lessee has certified
to Lessor all bids received, Owner Participant, any affiliate thereof or any
Person contacted by Owner Participant may submit a further bid or bids to Lessee
so as to be received not later than ten Business Days prior to the Termination
Date proposed by Lessee (unless Lessee shall have revoked the Termination Notice
specifying such proposed Termination Date). Subject to the next succeeding
sentence, on or before the Termination Date, subject to the release of all
mortgage and security interests with respect to the Aircraft under the
Indenture: (1) Lessee shall deliver the Aircraft, or cause the Aircraft to be
delivered, to the bidder(s), if any, which submitted the highest all-cash bid
therefor at least ten Business Days prior to such Termination Date, in the same
manner and in the same condition and otherwise in accordance with all the terms
of this Lease as if delivery were made to Lessor pursuant to Section 5, and
shall duly transfer to Lessor title to any engines not owned by Lessor all in
accordance with the terms of Section 5, (2) Lessor shall comply with the terms
of the Indenture and shall, without recourse or warranty (except as to the
conveyance of whatever title was received from Lessee and as to the absence of
the Lessor Liens, including for this purpose Liens which would be Lessor Liens
but for the proviso in the definition of Lessor Liens), subject to prior or
concurrent payment by Lessee of all amounts due under clause (3) of this
sentence, sell all of Lessor's right, title and interest in and to the Aircraft
for cash in Dollars to such bidder(s), the total sales price realized at such
sale to be retained by Lessor, and (3) Lessee shall simultaneously pay or cause
to be paid to Lessor in funds of the type specified in Section 3(e) hereof, an
amount equal to the sum of (A) the excess, if any, of (i) the Termination Value
for the Aircraft, computed as of the Termination Date, over (ii) the net cash
proceeds from the sale of the Aircraft after deducting the reasonable expenses
incurred by Lessor in connection with such sale, (B) all unpaid Basic Rent with
respect to the Aircraft payable prior to such Termination Date and all unpaid
Supplemental Rent due on or prior to the Termination Date with respect to the
Aircraft, and (C) the Make-Whole Amount, if any, due on the Equipment Notes, and
upon such payment Lessor simultaneously will transfer to Lessee, without
recourse or warranty (except as to the conveyance of whatever title was received
from Lessee and as to the absence of Lessor Liens, including for this purpose
Liens which would be Lessor Liens but for the proviso in the definition of
Lessor Liens), all of Lessor's right, title and interest in and to any Engines
constituting part of the Aircraft which were not sold with the Aircraft.
Notwithstanding the preceding sentence, Lessor may, if Lessee has not revoked
the Termination Notice, elect to retain title to the Aircraft. If Lessor so
elects, Lessor shall notify Lessee of such election at least fifteen Business
Days prior to the Termination Date accompanied by an irrevocable undertaking by
Owner Participant to make available to Lessor for payment to Loan Trustee on the
Termination Date the amount required to pay in full the unpaid principal amount
of the Equipment Notes outstanding on the Termination Date plus interest accrued
thereon through the Termination Date, together with the Make-Whole Amount, if
any, due on the Equipment Notes. Upon receipt of notice of such an election by
Lessor and the accompanying undertaking by Owner Participant, Lessee shall cease
its efforts to obtain bids as provided above and shall reject all bids
theretofore or thereafter received. On the Termination Date, Lessor shall
(subject to the payment by Lessee of all Rent due on or prior to such date as
set forth below) pay in full the unpaid principal amount of the Equipment Notes
outstanding on the Termination Date plus interest accrued thereon through the
Termination Date together with all Make-Whole Amount, if any, due on the
Equipment Notes and, so long as the Equipment Notes are paid as aforesaid,
Lessee shall deliver the Airframe and Engines or engines to Lessor in accordance
with Section 5 and shall pay all Basic Rent payable prior to the Termination
Date and all Supplemental Rent (other than Termination Value) due on or prior to
the Termination Date. If no sale occurs on the Termination Date and Lessor has
not made the payment contemplated by the preceding sentence and thereby caused
this Lease to terminate, or if Lessee revokes its Termination Notice, this Lease
shall continue in full force and effect, Lessee shall pay the actual and
reasonable out-of-pocket costs and expenses incurred by Owner Participant and
Lessor (unless such failure to terminate this Lease is a consequence of the
failure of Lessor or Owner Participant without due cause to make, or cause to be
made, the payment referred to in the immediately preceding sentence), if any, in
connection with preparation for such sale and Lessee may give one or more
additional Termination Notices in accordance with Sections 9(a)(1) and 9(a)(2),
subject to the last sentence of this Section 9(b). In the event of any such sale
or such retention of the Aircraft by Lessor and upon compliance by Lessee with
the provisions of this paragraph, the obligations of Lessee to pay Basic Rent
and all other amounts hereunder shall cease to accrue and this Lease shall
terminate. Lessor may, but shall be under no duty to, solicit bids or inquire
into the efforts of Lessee to obtain bids in connection with any such sale.
Lessee may revoke a Termination Notice given pursuant to Section 9(a)(2) no more
than four times during the Term.
(c) Termination as to Engines. At any time during the Term, so long
as no Event of Default has occurred and is continuing, on at least thirty (30)
days' prior written notice, Lessee may terminate this Lease with respect to any
Engine. Prior to the date of such termination, Lessee shall replace such Engine
hereunder by complying with the terms of Section 10(b) to the same extent as if
an Event of Loss had occurred with respect to such Engine, and Lessor shall
transfer such right, title and interest as it may have to the replaced Engine as
provided in Section 5(b). No termination of this Lease with respect to any
Engine as contemplated by this Section 9(c) shall result in any reduction of
Basic Rent.
SECTION 10. Loss, Destruction, Requisition, etc. (a) Event of Loss
with Respect to the Aircraft. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines then installed thereon,
Lessee shall as soon as practicable (and, in any event, within 30 days after an
Event of Loss has occurred) notify Lessor of such Event of Loss, and, within 90
days after such Event of Loss, Lessee shall notify Lessor of its election to
perform one of the following options (it being agreed that if Lessee has not
given such notice of election within such 90-day period, Lessee shall be deemed
to have elected to perform the option set forth in the following clause (ii)).
Lessee 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); provided that if Lessee has not performed
such obligation on or prior to the Loss Payment Date, then Lessee
shall on the Loss Payment Date pay to Lessor the amount specified in
clause (ii) below; or
(ii) on or before the Loss Payment Date, pay or cause to
be paid to Lessor in funds of the type specified in Section 3(e)
hereof, an amount equal to the Stipulated Loss Value of the Aircraft
corresponding to the Stipulated Loss Value Date occurring on or
immediately following the Loss Payment Date; provided, however, that
if a Lease Period Date occurs prior to the Loss Payment Date with
respect to which Stipulated Loss Value is determined, Lessee shall
pay on such Lease Period Date an amount equal to the Basic Rent that
would have been payable on such Lease Period Date if such Event of
Loss had not occurred.
The "Loss Payment Date" with respect to an Event of Loss means the
earlier of (x) the Business Day next succeeding the 120th day following the date
of occurrence of such Event of Loss or (y) an earlier Business Day irrevocably
specified at least 15 days in advance by notice from Lessee to Lessor and Loan
Trustee.
At such time as Lessor shall have received the amounts specified in
clause (ii) above, together with all other amounts then due hereunder
(including, without limitation, all Basic Rent due before the date of such
payment and all Supplemental Rent), under the Participation Agreement and under
the Tax Indemnity Agreement, (1) the obligation of Lessee to pay the
installments of Basic Rent, Supplemental Rent, Stipulated Loss Value,
Termination Value or any other amount shall cease to accrue, (2) this Lease
shall terminate, (3) Lessor will comply with the terms of the Indenture and
transfer to or at the direction of Lessee, without recourse or warranty (except
as to the conveyance of whatever title was received from Lessee and as to the
absence of Lessor Liens, including for this purpose Liens which would be Lessor
Liens but for the proviso in the definition of Lessor Liens), all of Lessor's
right, title and interest in and to the Airframe and both Engines, and furnish
to or at the direction of Lessee a bill of sale in form and substance reasonably
satisfactory to Lessee (or any Permitted Sublessee), evidencing such transfer,
and (4) Lessee will be subrogated to all claims of Lessor, if any, against third
parties, for damage to or loss of the Airframe and any Engines which were
subject to such Event of Loss to the extent of the then insured value of the
Aircraft.
If Lessee elects to substitute a Replacement Airframe (or a
Replacement Airframe and one or more Replacement Engines, as the case may be)
Lessee shall, at its sole expense, not later than the Loss Payment Date, (A)
furnish Lessor with a full warranty bill of sale and an FAA bill of sale, in
form and substance reasonably satisfactory to Lessor, evidencing the transfer of
title to such Replacement Airframe (or Replacement Airframe and one or more
Replacement Engines), (B) cause a Lease Supplement and an Indenture Supplement
for such Replacement Airframe and Replacement Engines, if any, to be delivered
to Lessor 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, (C) 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 are necessary for Lessor to perfect its and Loan Trustee's
interest therein and herein in the United States, or in any other jurisdiction
in which the Aircraft is then registered, (D) furnish Lessor and Loan Trustee
with an opinion of Lessee's counsel (which may be internal counsel of Lessee)
addressed to Lessor and Loan Trustee to the effect that upon such replacement,
title to such Replacement Airframe and Replacement Engines, if any, will be
vested in Lessor and such Replacement Airframe and Replacement Engines, if any,
will be subject to the Lien of the Indenture and addressing the matters set
forth in clauses (B) and (C), (E) furnish Lessor with a certificate of an
independent aircraft engineer or appraiser, certifying that the Replacement
Airframe and Replacement Engines, if any, have a value and utility (without
regard to hours or cycles) at least equal to the Airframe and Engines, if any,
so replaced, assuming the Airframe and such Engines were in the condition and
repair required by the terms hereof immediately prior to the occurrence of such
Event of Loss, (F) furnish Lessor with evidence of compliance with the insurance
provisions of Section 11 with respect to such Replacement Airframe and
Replacement Engines, if any, and (G) furnish Lessor and Loan Trustee with an
opinion of Lessee's counsel (which may be internal counsel of Lessee) to the
effect that Lessor and Loan Trustee as assignee of Lessor 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 Lessor or 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 Lessee's special counsel delivered pursuant to Section 3.01 of
the Participation Agreement on the Delivery Date and such other qualifications
and assumptions as are at the time customary in opinions rendered in comparable
circumstances. For all purposes hereof, the property so substituted shall after
such transfer be deemed part of the property leased hereunder and shall be
deemed an "Aircraft", "Airframe" and "Engine", as the case may be, as defined
herein.
In the case of title to each Replacement Airframe or Replacement
Airframe and one or more Replacement Engines being transferred to Lessor and
each Replacement Airframe or Replacement Airframe and one or more Replacement
Engines being subjected to the Lien of the Indenture under this Section 10(a),
promptly upon the recordation of the Lease Supplement and 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), Lessee will cause to be delivered to Lessor
and Loan Trustee a favorable opinion of FAA counsel selected by Lessee 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 Lessee, which counsel
shall be reasonably satisfactory to Lessor and Loan Trustee) addressed to Lessor
and Loan Trustee as to the due registration of such Replacement Aircraft in the
name of Lessor (or other Person if the Aircraft subject to the Event of Loss had
been registered in the name of such other Person at the time of the Event of
Loss) and the due recordation of such Lease Supplement and 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 the Indenture.
Upon compliance with clauses (A) through (G) of the fourth paragraph
of this Section 10(a), (i) Lessor shall simultaneously comply with the terms of
the Indenture and transfer to or at the direction of Lessee, without recourse or
warranty (except as to the conveyance of whatever title was received from Lessee
and as to the absence of Lessor Liens, including for this purpose Liens which
would be Lessor Liens but for the proviso in the definition of Lessor Liens),
all of Lessor's right, title and interest, if any, in and to the Airframe and
any Engines with respect to which such Event of Loss occurred and furnish to or
at the direction of Lessee a bill of sale, in form and substance reasonably
satisfactory to Lessee, evidencing such transfer and (ii) Lessee will be
subrogated to all claims of Lessor, if any, against third parties, for damage to
or loss of the Airframe and any Engines which were subject to such Event of
Loss. No substitution pursuant to this Section 10(a) shall result in any
reduction in Basic Rent.
(b) Event of Loss with Respect to an Engine. Upon the occurrence of
an Event of Loss with respect to an Engine under circumstances in which there
has not occurred an Event of Loss with respect to the Airframe, Lessee shall
give Lessor prompt written notice thereof and shall, within 120 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, as
replacement for the Engine with respect to which such Event of Loss occurred,
title to a Replacement Engine free and clear of all Liens (other than Permitted
Liens). Prior to or at the time of any such conveyance, Lessee will (i) furnish
Lessor with a warranty (as to title) bill of sale, in form and substance
reasonably satisfactory to Lessor, with respect to such Replacement Engine, (ii)
cause a Lease Supplement and an Indenture Supplement covering such Replacement
Engine to be delivered to Lessor 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, (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 Lessor's and Loan Trustee's interest therein and
herein in the United States, or in such other jurisdiction in which the Engine
is then registered, (iv) furnish Lessor and Loan Trustee with an opinion of
Lessee's counsel (which may be internal counsel to Lessee) addressed to Lessor
and Loan Trustee to the effect that, upon such replacement, title to such
Replacement Engine will be vested in Lessor and such Replacement Engine will be
subject to the Lien of the Indenture, (v) furnish Lessor with a certificate of
an aircraft engineer or appraiser (who may be an employee of Lessee) certifying
that such Replacement Engine has a value and utility (without regard to hours or
cycles) at least equal to the Engine so replaced assuming such Engine was in the
condition and repair required by the terms hereof immediately prior to the
occurrence of such Event of Loss and (vi) furnish Lessor with evidence of
compliance with the insurance provisions of Section 11 with respect to such
Replacement Engine. For all purposes hereof, the Replacement Engine so
substituted shall after such transfer be deemed part of the property leased
hereunder and shall be deemed an "Engine" as defined herein. Promptly upon the
recordation of the Lease Supplement and 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),
Lessee will cause to be delivered to Lessor and Loan Trustee an opinion of FAA
counsel selected by Lessee 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 Lessee, which counsel shall be reasonably satisfactory to Lessor and
Loan Trustee) addressed to Lessor and Loan Trustee as to the due recordation of
such Lease Supplement and 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 the Indenture.
Upon compliance with clauses (i) through (vi) of the second sentence of this
paragraph, Lessor will comply with the terms of the Indenture and transfer to or
at the direction of Lessee without recourse or warranty (except as to the
conveyance of whatever title was received from Lessee and as to the absence of
Lessor Liens, including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens) all of Lessor's right, title
and interest, if any, in and to (A) the Engine with respect to which such Event
of Loss occurred and furnish to or at the direction of Lessee a bill of sale in
form and substance reasonably satisfactory to Lessee, evidencing such transfer
and (B) all claims, if any, against third parties, for damage to or loss of the
Engine subject to such Event of Loss, and such Engine shall thereupon cease to
be an Engine leased hereunder. No substitution pursuant to this Section 10(b)
shall result in any reduction in Basic Rent.
(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 11) received at any time by Lessor or by Lessee
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 Lessee pursuant to Section 10(a), such
payments shall be paid over to, or retained by, Lessor and upon
completion of such replacement shall be paid over to, or retained
by, Lessee;
(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
10(a), after reimbursement of Lessor (as provided in Section 7.01 of
the Trust Agreement) for actual and reasonable out-of-pocket costs
and expenses, so much of such payments remaining as shall not exceed
the Stipulated Loss Value required to be paid by Lessee pursuant to
Section 10 (a) shall be applied in reduction of Lessee's obligation
to pay the Stipulated Loss Value, if not already paid by Lessee, or,
if already paid by Lessee, shall be applied to reimburse Lessee for
its payment of the Stipulated Loss Value, and the balance, if any,
of such payment remaining thereafter will be paid over to, or
retained by, Lessee; provided that Lessor shall be entitled to so
much of the excess, if any, of such payment over the greater of (x)
the Stipulated Loss Value and (y) the fair market value of the
Aircraft as Lessor shall demonstrate to Lessee's reasonable
satisfaction is attributable to compensation for loss of Lessor's
interest in the Aircraft as distinguished from the loss of use of
the Aircraft; and
(iii) if such payments are received with respect to an Engine
with regard to which an Event of Loss has occurred, so much of such
payments remaining after reimbursement of Lessor (as provided in
Section 7.01 of the Trust Agreement) for actual and reasonable
out-of-pocket costs and expenses shall be paid over to, or retained
by, Lessee; provided that Lessee has fully performed its obligations
under Section 10(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 during the Term (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, Lessee shall promptly notify
Lessor of such requisition, and all of Lessee's rights and obligations under
this Lease 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, Lessee's obligations other than payment
obligations shall only continue to the extent feasible. If such Airframe and
Engines or engines installed thereon are not returned by such government prior
to the end of the Term, Lessee shall be obligated to return the Airframe and
such Engines or engines to Lessor pursuant to, and in all other respects in
compliance with the provisions of, Section 5 promptly upon the date of such
return by such government. If, in the event of any such requisition, Lessee
fails to return the Aircraft on or before the thirtieth day beyond the end of
the Term, such failure shall constitute an Event of Loss which shall be deemed
to have occurred on the last day of the Term and in such event Lessee shall make
the payment contemplated by Section 10(a)(ii) in respect of such Event of Loss;
provided, however, that Lessor may notify Lessee in writing on or before the
twentieth day prior to the last day of the Term that, in the event Lessee shall
fail by reason of such requisition to return the Airframe and such Engines or
engines on or before the thirtieth day beyond the end of the Term, such failure
shall not be deemed an Event of Loss. Upon the giving of such notice and such
failure to return by the thirtieth day beyond the end of the Term, Lessee shall
be relieved of all of its obligations pursuant to the provisions of Section 5
(including Exhibit J to the Participation Agreement) but not under any other
Section. If any engine not owned by Lessor is then installed on the Airframe,
Lessee will, at no cost to Lessor, furnish, or cause to be furnished, to Lessor
a full warranty (as to title) bill of sale with respect to each such engine, in
form and substance reasonably satisfactory to Lessor (together with an opinion
of counsel to the effect that such full warranty bill of sale has been duly
authorized and delivered and is enforceable in accordance with its terms and
that such engines are free and clear of Liens other than Lessor Liens (including
for this purpose Liens which would be Lessor Liens but for the proviso in the
definition of Lessor Liens), Noteholder Liens and Loan Trustee Liens), against
receipt from Lessor of a bill of sale evidencing the transfer, without recourse
or warranty (except as to the conveyance of whatever title was received from
Lessee and as to the absence of Lessor Liens, including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of Lessor
Liens), by Lessor to Lessee or its designee of all of Lessor's right, title and
interest in and to any Engine constituting part of the Aircraft but not then
installed on the Airframe. All payments received by Lessor or Lessee from such
government for the use of such Airframe and Engines or engines during the Term
shall be paid over to, or retained by, Lessee (or, if directed by Lessee, any
Permitted Sublessee). All payments received by Lessor or Lessee from such
government for the use of such Airframe and Engines or engines after the end of
the Term shall be paid over to, or retained by, Lessor unless Lessee shall have
exercised its purchase option hereunder, in which case such payments shall be
made to Lessee.
(e) Requisition for Use 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, Lessee
will replace such Engine by complying with the terms of Section 10(b) to the
same extent as if an Event of Loss had occurred with respect to such Engine.
Upon such replacement, any payments received by Lessee or Lessor from such
government with respect to such requisition shall be paid over to, or retained
by, Lessee.
(f) Application of Payments During Existence of Event of Default.
Any amount referred to in this Section 10 that is payable to or retainable by
Lessee shall not be paid to or retained by Lessee 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 Lessor as security for the
obligations of Lessee under this Lease. When any such Event of Default or
Payment Default ceases, such amount shall be paid to Lessee.
SECTION 11. Insurance. (a) Aircraft Liability Insurance. (i) Except
as provided in clause (ii) of this subsection (a), and subject to the rights of
Lessee to establish and maintain self-insurance in the manner and to the extent
specified in Section 11(c), Lessee will carry, or cause to be carried, at no
expense to Lessor, 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 Lessee's fleet
on which Lessee carries insurance; provided that such liability insurance shall
not be less than the amount certified in the insurance report delivered to
Lessor and Loan Trustee on the Delivery Date, (B) of the type covering the same
risks as from time to time applicable to aircraft operated by Lessee (or, if a
Sublease is then in effect, by the Permitted Sublessee) 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 11(a) and any policies taken out in substitution or replacement for any
of such policies shall: (A) name Lessor, in its individual capacity and as owner
trustee, Loan Trustee, Subordination Agent, each Pass Through Trustee, Owner
Participant, Policy Provider and Liquidity Provider (but without imposing on any
such parties liability to pay the premiums for such insurance) (and, if any
Sublease is then in effect, Lessee in its capacity as sublessor under such
Sublease) as their Interests (as defined below in this Section 11) 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 Lessee or any other Person 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 Lessee, (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 Delivery Date to
Lessor, Loan Trustee, Owner Participant, Policy Provider and Liquidity Provider,
or if such insurance is allowed to lapse for nonpayment of premium, such
cancellation, change or lapse shall not be effective as to any Additional
Insured for 30 days (seven days, or such other period as is then generally
available in the industry, in the case of any war risk or allied perils
coverage) after receipt by such Additional Insured of written notice from such
insurers of such cancellation, change or lapse, (D) provide that the Additional
Insureds shall have no obligation or liability for premiums, commissions,
assessments or calls in connection with such insurance, (E) provide that the
insurers shall waive any rights of (1) set-off, counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability of
the Additional Insureds to the extent of any moneys due to the Additional
Insureds and (2) subrogation against the Additional Insureds to the extent that
Lessee 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 11(a) and in Section 11(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 sublease 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 Lessee, or an insurance policy issued
by such government, against any of the risks that Lessee is required to insure
against hereunder shall be considered adequate insurance for purposes of this
Section 11(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, Lessee 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 11(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 Lessee (or, if a
Sublease is then in effect, by the Permitted Sublessee) 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 Lessee
(or, if a Sublease is then in effect, by the Permitted Sublessee) of the same
type as such non-flown Airframe or Engine and that are on the ground and not
being flown.
(b) Insurance Against Loss or Damage to Aircraft. (i) Except as
provided in clause (ii) of this subsection (b), and subject to the rights of
Lessee to establish and maintain self-insurance in the manner and to the extent
specified in Section 11(c), Lessee shall maintain, or cause to be maintained, in
effect with insurers of recognized responsibility, at no expense to Lessor,
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 Lessee (or, if a Sublease is then in effect, by the Permitted
Sublessee) with respect to other similar aircraft operated by Lessee or such
Permitted Sublessee, 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 Lessee (or, if a
Sublease is then in effect, by the Permitted Sublessee) 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 Lease
be for an amount not less than the Stipulated Loss Value for the Aircraft, (B)
such insurance need not cover an Engine while attached to an airframe not owned,
leased or operated by Lessee, 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 Lessee). Any policies carried in accordance with this Section
11(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 Stipulated Loss Value for the Aircraft 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 F up to an amount equal to
the Stipulated Loss Value for the Aircraft 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 Lessor (or, as long as the Indenture has
not been discharged, Loan Trustee) and that all other amounts shall be payable
to Lessee, unless the insurer has received notice that an Event of Default
exists, in which case all insurance proceeds for any loss or damage to the
Aircraft (or Engines) up to an amount equal to the Stipulated Loss Value for the
Aircraft shall be payable to Lessor (or, as long as the Indenture has not been
discharged, 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
Lessee or any other Person and shall insure the Additional Insureds' Interests
as they appear, regardless of any breach or violation by Lessee 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 Delivery Date to Lessor and Loan Trustee or if
such insurance is allowed to lapse for nonpayment of premium, such cancellation,
change or lapse shall not be effective as to the Additional Insureds for 30 days
(seven days, or such other period as is customarily available in the industry,
in the case of war risk or allied perils coverage) after receipt by the
Additional Insureds of written notice from such insurers of such cancellation,
change or lapse, (D) provide that the Additional Insureds shall have no
obligation or liability for premiums, commissions, assessments or calls in
connection with such insurance, (E) provide that the insurers shall waive rights
of (1) setoff, counterclaim or any other deduction, whether by attachment or
otherwise, in respect of any liability of the Additional Insureds to the extent
of any moneys due to the Additional Insureds and (2) subrogation against the
Additional Insureds to the extent Lessee 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 sublease 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
Lessee, or an insurance policy issued by such government, against any risks
which Lessee is required hereunder to insure against shall be considered
adequate insurance for purposes of this Section 11(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, Lessee 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 Section 11(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 Lessee (or,
if a Sublease is then in effect, by the Permitted Sublessee) 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
Section 11(c), Lessee 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 the Stipulated Loss Value for the Aircraft.
(c) Self-Insurance. Lessee 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 Sections
11(a) or 11(b), insuring for a maximum amount that is less than the amounts set
forth in Sections 11(a) and 11(b)), the risks required to be insured against
pursuant to Sections 11(a) and 11(b), but in no case shall the self-insurance
with respect to all of the aircraft and engines in Lessee'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 Lessee 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 Lessee may self-insure the Aircraft to such higher
level. In addition to the foregoing right to self-insure, Lessee 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 Lessee with the insurers. As between Lessor and Lessee it is agreed that all
insurance payments received under policies required to be maintained by Lessee
hereunder, exclusive of any payments received in excess of the Stipulated Loss
Value for the Aircraft from such policies, as the result of the occurrence of an
Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe
that has been or is being replaced by Lessee pursuant to Section
10(a), such payments shall be paid over to, or retained by, Lessor
and upon completion of such replacement shall be paid over to, or
retained by, Lessee;
(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 10(a), after reimbursement of Lessor (as provided in Section
7.01 of the Trust Agreement) for actual and reasonable out-of-pocket
costs and expenses, so much of such payments remaining as do not
exceed the Stipulated Loss Value required to be paid by Lessee
pursuant to Section 10(a) shall be applied in reduction of Lessee's
obligation to pay the Stipulated Loss Value, if not already paid by
Lessee, or, if already paid by Lessee, shall be applied to reimburse
Lessee for its payment of the Stipulated Loss Value and the balance,
if any, of such payment remaining thereafter will be paid over to,
or retained by, Lessee; and
(iii) if such payments are received with respect to an
Engine, so much of such payments remaining after reimbursement of
Lessor (as provided in Section 7.01 of the Trust Agreement) for
actual and reasonable out-of-pocket costs and expenses shall be paid
over to, or retained by, Lessee; provided that Lessee has fully
performed its obligations under Section 10(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 Lessee in excess of the Stipulated Loss
Value for the Aircraft shall be paid to Lessee.
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 Lessee) for repairs or for
replacement property in accordance with the terms of Sections 7 and 8, and any
balance remaining after compliance with such Sections with respect to such loss
or damage shall be paid to Lessee. Any amount referred to in the preceding
sentence or in clause (i), (ii) or (iii) of the first paragraph of this Section
11(d) that is payable to Lessee shall not be paid to Lessee (or, if it has been
previously paid directly to Lessee, shall not be retained by Lessee) 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 Lessor as security for the
obligations of Lessee under this Lease, 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 Lessee.
(e) Reports, Etc. On or before the Delivery Date and annually
following renewal of Lessee's insurance coverage, Lessee will furnish to Lessor,
Loan Trustee, Owner Participant, Policy Provider and Liquidity Provider a report
signed by a firm of independent aircraft insurance brokers appointed by Lessee
(which brokers may be in the regular employ of Lessee), stating the opinion of
such firm that the insurance then carried and maintained on the Aircraft
complies with the terms hereof. All information contained in such report shall
be Confidential Information and shall be treated by Lessor, Loan Trustee, Owner
Participant, Policy Provider and Liquidity Provider and each of their affiliates
and officers, directors, agents and employees in accordance with the provisions
of Section 6.01(i) of the Participation Agreement. Lessee will cause such firm
to notify Lessor, Loan Trustee, Owner Participant, Policy Provider and Liquidity
Provider of any act or omission on the part of Lessee of which such firm has
knowledge that might invalidate or render unenforceable, in whole or in part,
any insurance on the Aircraft. Lessee will also cause such firm to notify
Lessor, Loan Trustee, Owner Participant, 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 11 will occur. Such information may only be provided to other
Persons in accordance with Section 6.01(i) of the Participation Agreement.
(f) Salvage Rights; Other. All salvage rights to the Airframe and
each Engine shall remain with Lessee's insurers at all times, and any insurance
policies of Loan Trustee, Lessor or Owner Participant insuring the Airframe or
any Engine shall provide for a release to Lessee of any and all salvage rights
in and to the Airframe or any Engine. Neither Lessor, Owner Participant, 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 11 or any other insurance maintained with respect to the Aircraft
or any other aircraft in Lessee's fleet.
SECTION 12. Inspection. At all reasonable times and upon at least 15
Business Days' prior written notice to Lessee, Lessor, Owner Participant, Policy
Provider or Loan Trustee or their respective authorized representatives may,
subject to the other conditions of this Section 12, inspect the Aircraft and may
inspect the books and records of Lessee 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)
Lessor, Owner Participant, Policy Provider, Loan Trustee or their respective
representatives, as the case may be, shall be fully insured at no cost to Lessee
in a manner satisfactory to Lessee with respect to any risks incurred in
connection with any such inspection or shall provide to Lessee a written release
satisfactory to Lessee with respect to such risks, (ii) any such inspection
shall be during Lessee's normal business hours and subject to the safety,
security and workplace rules applicable at the location where such inspection is
conducted and any applicable governmental rules or regulations, (iii) any such
inspection of the Aircraft shall be a visual, walk-around inspection of the
interior and exterior of the Aircraft and shall not include opening any panels,
bays or the like without Lessee's express consent, which consent Lessee 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, Lessee and Lessee 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 Lessor, Owner
Participant, Policy Provider and Loan Trustee and their respective
representatives in accordance with the provisions of Section 6.01(i) of the
Participation Agreement. Any inspection pursuant to this Section 12 shall be at
the sole risk (including, without limitation, any risk of personal injury or
death) and expense of Lessor, Owner Participant, Policy Provider or Loan Trustee
(or their respective representatives) making such inspection. Except during the
continuance of an Event of Default, all inspections by Lessor, Owner
Participant, Policy Provider and Loan Trustee and their respective
representatives provided for under this Section 12 shall be limited to one
inspection of any kind contemplated by this Section 12 during any consecutive
twelve month period. In addition, during the last six (6) months of the Term
(unless Lessee has elected to purchase the Aircraft or renew this Lease), with
reasonable notice, Lessee will cooperate, and cause any Permitted Sublessee to
cooperate, at Lessor's sole cost, in all reasonable respects with the efforts of
Lessor to sell or lease the Aircraft, including, without limitation, permitting
prospective purchasers or lessees to inspect the Aircraft and the books and
records of Lessee specified above pursuant to the preceding provisions of this
Section 12. None of Lessor, Owner Participant, Policy Provider or Loan Trustee
shall have any duty to make any inspection nor shall any of them incur any
liability or obligation by reason of not making such inspection.
SECTION 13. Assignment. Except as otherwise provided herein, Lessee
will not, without prior written consent of Lessor, assign in whole or in part
any of its rights or obligations hereunder. Lessor agrees that it will not
assign or convey its right, title and interest in and to this Lease or the
Aircraft except as provided herein, in the Trust Agreement or in the
Participation Agreement. Subject to the foregoing, the terms and provisions of
this Lease shall be binding upon and inure to the benefit of Lessor and Lessee
and their respective successors and permitted assigns.
SECTION 14. Events of Default. Each of the following events
constitutes an Event of Default (whether any 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 shall continue so long as, but only as long as, it has not been remedied
or explicitly waived:
(a) Lessee fails to make any payment of Basic Rent or Stipulated
Loss Value within 15 days after such payment is due;
(b) Lessee fails to make payment when the same is due of any
Supplemental Rent (other than Stipulated Loss Value) due hereunder, and
such failure continues unremedied for 30 days after the receipt by Lessee
of written notice thereof from the party entitled thereto (provided that
any failure to pay any amount owed by Lessee under the Tax Indemnity
Agreement or any failure of Lessee to pay to Lessor or Owner Participant
when due any Excluded Payments shall not constitute an Event of Default
unless notice is given by Owner Participant to Lessee and Loan Trustee
that such failure constitutes an Event of Default);
(c) Lessee fails to carry and maintain insurance or indemnity on or
with respect to the Aircraft in accordance with the provisions of Section
11; 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
Lessor of the notice of cancellation or lapse referred to in Section 11 or
(ii) the date such insurance is not in effect as to Lessor, Loan Trustee,
Owner Participant and Liquidity Provider;
(d) Lessee fails to perform or observe any other covenant, condition
or agreement (except the covenants set forth in the Tax Indemnity
Agreement and in paragraphs 2 and 3 of Exhibit J to the Participation
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 Lessee of written notice thereof from Lessor or Loan Trustee;
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 Lessee so long as Lessee is diligently
proceeding to remedy such failure;
(e) any representation or warranty made by Lessee in any Operative
Document (except the representations and warranties set forth in Section
[3] of the Tax Indemnity Agreement) 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 Lessee of written notice thereof from Lessor or
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 Lessee so long as
Lessee is diligently proceeding to remedy such incorrectness;
(f) Lessee 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) Lessee 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 Lessee as a debtor in any such case, or Lessee 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 Lessee 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 Lessee, a
receiver, trustee or liquidator of Lessee or sequestering any substantial
part of its property, or granting any other relief in respect of Lessee as
a debtor under any bankruptcy laws or insolvency laws (as in effect at
such time), and any such order, judgment or decree of appointment or
sequestration remains in force undismissed, unstayed or unvacated for a
period of 90 days after the date of entry thereof; or
(i) a petition against Lessee 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 Lessee, any court of
competent jurisdiction assumes jurisdiction, custody or control of Lessee
or of any substantial part of its property and such jurisdiction, custody
or control remains in force unrelinquished, unstayed or unterminated for a
period of 90 days
provided, however, that notwithstanding anything to the contrary contained in
this Section 14, any failure of Lessee 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 Lessee is continuing to comply with all of the terms of Section 10.
SECTION 15. Remedies. If an Event of Default has occurred and is
continuing and so long as the same continues unremedied, then and in every such
case Lessor may, at its option, declare by written notice to Lessee this Lease
to be in default, provided, that if an Event of Default referred to in Section
14(f), (g), (h) or (i) has occurred, this Lease shall be deemed to be declared
in default without further act; and at any time thereafter, Lessor may 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, Lessor 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 15 in such manner as
to limit Lessee's control under this Lease (or any Permitted Sublessee's control
under any Sublease) 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 Lessor by registered or certified mail to Lessee
(and any such Permitted Sublessee) 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 Lessee (or such
Permitted Sublessee) relating to the Aircraft):
(a) cause Lessee, upon the demand by notice of Lessor, at Lessee's
expense, to deliver promptly, and Lessee shall deliver promptly, all or
such part of the Airframe or any Engine as Lessor so demands to Lessor or
its order in the manner and condition required by, and otherwise in
accordance with all the provisions of Section 5 as if such Airframe or
Engine were being returned at the end of the Term, or, if Lessee has
failed to so deliver the Airframe or any Engine after such demand, Lessor,
at its option, may enter upon the premises where all or any part of the
Airframe or any Engine are located and take immediate possession of and
remove the same together with any engine which is not an Engine but which
is installed on the Airframe, subject to all of the rights of the owner,
lessor, lienor or secured party of such engine; provided that the Airframe
with an engine (which is not an Engine) installed thereon may be flown or
returned only to a location within the continental United States, and such
engine shall be held for the account of any such owner, lessor, lienor,
secured party or, if such engine is owned by Lessee, may at the option of
Lessee with the consent of Lessor (which will not be unreasonably
withheld) or at the option of Lessor with the consent of Lessee (which
will not be unreasonably withheld), be exchanged with Lessee for an Engine
in accordance with the provisions of Section 10(b);
(b) sell all or any part of the Airframe and any Engine at public or
private sale, whether or not Lessor at the time has possession thereof, as
Lessor 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
Lessor, in its sole discretion, determines, all free and clear of any
rights or claims of Lessee, except as hereinafter set forth in this
Section 15;
(c) whether or not Lessor has exercised, or thereafter at any time
exercises, any of its rights under paragraph (a) or paragraph (b) above
with respect to the Airframe and/or any Engine, Lessor, by written notice
to Lessee specifying a payment date which shall be the Lease Period Date
not earlier than ten days from the date of such notice, may demand that
Lessee pay to Lessor, and Lessee shall pay Lessor, on the payment date so
specified, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the installments of Basic Rent for the Aircraft due
for Lease Periods commencing on or after the Delivery Date or the Lease
Period Date specified as the payment date in such notice), any unpaid
Basic Rent specified in Exhibit B-1 as payable on Lease Period Dates prior
to the payment date so specified (including, in each case, without
limitation, any adjustments to Basic Rent payable pursuant to Section
3(c)) plus whichever of the following amounts Lessor, in its sole
discretion, specifies in such notice (together with interest, if any, on
such amount at the Past Due Rate from such specified payment date until
the date of actual payment of such amount): (i) an amount equal to the
excess, if any, of the Stipulated Loss Value for the Aircraft, computed as
of the Lease Period Date specified as the payment date in such notice,
over the aggregate fair market rental value (computed provided as in this
Section 15) of such Aircraft for the remainder of the Term, after
discounting such aggregate fair market rental value to present value as of
the Lease Period Date specified as the payment date in such notice at an
annual rate equal to the Base Rate plus 1%; or (ii) an amount equal to the
excess, if any, of the Stipulated Loss Value for the Aircraft, computed as
of the Lease Period Date specified as the payment date in such notice,
over the fair market sales value of such Aircraft (computed provided as in
this Section 15) as of the Lease Period Date specified as the payment date
in such notice;
(d) if Lessor, pursuant to paragraph (b) above, has sold the
Airframe and/or any Engine, Lessor, in lieu of exercising its rights under
paragraph (c) above with respect to the Aircraft, may, if it so elects,
demand that Lessee pay Lessor, and Lessee shall pay to Lessor, on the date
of such sale, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the installments of Basic Rent for the Aircraft due on
or after such date), any unpaid Basic Rent with respect to the Aircraft
specified in Exhibit B-1 as payable prior to such date (including, in each
case, without limitation, any adjustments to Basic Rent payable pursuant
to Section 3(c)) plus the amount of any deficiency between the net
proceeds of such sale (after deduction of all actual and reasonable
out-of-pocket costs of sale) and the Stipulated Loss Value for the
Aircraft, computed as of the Stipulated Loss Value Date on or immediately
preceding the date of such sale together with interest, if any, on the
amount of such deficiency, at the Past Due Rate, from the date of such
sale to the date of actual payment of such amount; and/or
(e) Lessor may rescind, terminate or cancel this Lease as to the
Aircraft, and/or may exercise any other right or remedy which may be
available to it under applicable law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for breach
hereof.
For the purposes of paragraph (c) above, the "fair market rental
value" or the "fair market sales value" of the Aircraft shall be the rental
value or sales value which would be obtained in an arm's-length transaction
between an informed and willing lessee or purchaser under no compulsion to lease
or purchase and an informed and willing lessor or seller in possession under no
compulsion to sell, in each case based upon the actual condition and location of
the Aircraft, which value shall be determined by mutual written agreement. In
the absence of mutual written agreement, such value shall be determined pursuant
to an appraisal prepared and delivered by a nationally recognized firm of
independent aircraft appraisers nominated by Lessor, and Lessor shall
immediately notify Lessee of such nomination. Lessee may object to such
nomination by notice within ten days after its receipt of Lessor's notice. If
Lessee does not so object, Lessor's nomination shall be conclusive and binding.
If Lessee objects, Lessor and Lessee shall endeavor, within ten days after such
objection is made, to select a mutually acceptable appraiser; provided that, if
Lessee does not so endeavor to make such selection, Lessor's nomination referred
to above shall be conclusive and binding. If Lessor and Lessee fail to reach
agreement (except for the reason referred to in the proviso in the preceding
sentence), or if any appraiser selected fails to act for any reason, then the
question shall be determined by an appraisal (applying the definitions of "fair
market rental value" and "fair market sales value" as set forth above based upon
the actual condition of the Aircraft) mutually agreed to by two recognized
independent aircraft appraisers, one of which appraisers shall be chosen by
Lessor and one by Lessee within five Business Days after Lessor or Lessee has
received written notice from the other party of a demand that such an appraisal
be made, which notice shall specify the appraiser chosen by the party giving the
notice or, if such appraisers cannot agree on the amount of such appraisal
within twenty Business Days after the end of such five-day period, each shall
render its own appraisal and shall by mutual consent choose another appraiser
within five Business Days after the end of such twenty-day period. If, within
such five-day period, such two appraisers fail to appoint a third appraiser,
then either Lessor or Lessee, on behalf of both, may request such appointment by
the then President of the Association of the Bar of the City of New York (or any
successor organization thereto) or, in his absence, failure, refusal or
inability to act, then either Lessor or Lessee may apply to the American
Arbitration Association (or any successor organization thereto) in New York, New
York for the appointment of such third appraiser. The decision of the third
appraiser so appointed shall be given within twenty Business Days after the
appointment of such third appraiser. As soon as the third appraiser has
delivered its appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is more
disparate from the average of all three determinations than each of the other
two determinations, then the determination of such appraiser shall be excluded,
the remaining two determinations shall be averaged and such average shall be
final and binding upon the parties hereto. If no determination is more disparate
from the average of all three determinations than each of the other
determinations, then such average shall be final and binding upon the parties
thereto. The actual and reasonable out-of-pocket cost of such appraisal or
appointment shall be borne by Lessee.
In addition, Lessee shall be liable, except as otherwise provided
above and without duplication of amounts payable hereunder, for any and all
unpaid Rent due hereunder before, after or during the exercise of any of the
foregoing remedies and for all reasonable legal fees and other actual and
reasonable costs and expenses (including fees of the appraisers referred to
above) incurred by Lessor, Loan Trustee, Noteholders and Owner Participant in
connection with the return of the Airframe or any Engine in accordance with the
terms of Section 5 or in placing such Airframe or Engine in the condition
required by such Section.
At any sale of the Aircraft or any part thereof pursuant to this
Section 15, Lessor (or Loan Trustee, any Noteholder or Owner Participant) or
Lessee may bid for and purchase such property. Lessor agrees to give Lessee at
least 30 days' prior written notice of the date fixed for any public sale of the
Airframe or any Engine or of the date on or after which any private sale will be
held, which notice Lessee hereby agrees to the extent permitted by applicable
law is reasonable notice, and any such public sale shall be conducted in general
so as to afford Lessee (and any Permitted Sublessee) a reasonable opportunity to
bid. Except as otherwise expressly provided above, no remedy referred to in this
Section 15 is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Lessor
at law or in equity; and the exercise or beginning of exercise by Lessor of any
one or more of such remedies shall not preclude the simultaneous or later
exercise by Lessor of any or all of such other remedies. No waiver by Lessor of
any Event of Default shall in any way be, or be construed to be, a waiver of any
future or subsequent Event of Default.
SECTION 16. Lessee's Cooperation Concerning Certain Matters.
Forthwith upon the execution and delivery of each Lease Supplement and Indenture
Supplement from time to time as required by the terms hereof and upon the
execution and delivery of any amendment to this Lease, to the Indenture or to
the Trust Agreement, Lessee will cause such Lease Supplement, Indenture
Supplement (and, in the case of the initial Lease Supplement and Indenture
Supplement, this Lease, the Trust Agreement and the Indenture as well) or
amendment to be duly filed and recorded, and maintained of record, in accordance
with the applicable laws of the government of registry of the Aircraft. In
addition, Lessee will promptly and duly execute and deliver to Lessor such
further documents and take such further action as Lessor or Loan Trustee may
from time to time reasonably request in order more effectively to carry out the
intent and purpose of this Lease and to establish and protect the rights and
remedies created or intended to be created in favor of Lessor and Loan Trustee
hereunder, including, without limitation, if requested by Lessor or Loan
Trustee, at the expense of Lessee, the execution and delivery of supplements or
amendments hereto or to the Indenture, each in recordable form, subjecting to
this the Lease and the Indenture, any airframe or engine substituted for the
Airframe or any Engine pursuant to the terms thereof and the recording or filing
of counterparts thereof, in accordance with the laws of such jurisdictions as
Lessor or Loan Trustee may from time to time deem advisable. Lessee will furnish
to Lessor and Loan Trustee promptly after execution and delivery of any
supplement and amendment hereto and promptly after the execution and delivery of
any supplement and amendment to the Indenture (except for any such supplement or
amendment which does not require or receive the approval of Lessee pursuant to
the Operative Documents and is not required pursuant to the terms of the
Operative Documents), an opinion of counsel reasonably satisfactory to Lessor
and Loan Trustee as to the due recording or filing of such supplement or
amendment.
SECTION 17. 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 Lease 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 Lessee, addressed to:
Delta Air Lines, Inc.
1030 Delta Boulevard
Atlanta, Georgia 30320
Attention: Treasurer, Dept. 856
Telephone: (404) 714-1724
Facsimile: (404) 715-4862
with a copy to the General Counsel at the same address, but
Dept. 971
Telephone: (404) 715-2387
Facsimile: (404) 715-1657
(ii) if to Lessor, addressed to:
Wells Fargo Bank Northwest, National Association,
MAC: U1254-031
79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Department
Telephone: (801) [_________]
Facsimile: (801) 246-5053
or if to any Noteholder, Loan Trustee or Owner Participant, addressed to such
Noteholder, Loan Trustee or Owner Participant at such address or facsimile
number as such Noteholder, Loan Trustee or Owner Participant has furnished by
notice to Lessor and to Lessee, and, until an address is so furnished, addressed
to such Noteholder, Loan Trustee or Owner Participant at its address or
facsimile number set forth in Section 16.01 of the Participation Agreement.
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 17.
SECTION 18. No Set-Off, Counterclaim, etc. All Rent shall be paid by
Lessee to Lessor in funds of the type specified in Section 3(e). Lessee's
obligation to pay all Rent payable hereunder shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
(i) any set-off, counterclaim, recoupment, defense or other right which Lessee
may have against Lessor, in its individual capacity or as Owner Trustee under
the Trust Agreement, Loan Trustee (in its individual capacity or as Loan
Trustee), any Noteholder, Owner Participant, or anyone else for any reason,
including, without limitation, any breach by Lessor or Owner Participant of
their respective warranties, agreements or covenants contained in any of the
Operative Documents, (ii) any defect in the title, registration, airworthiness,
condition, design, operation, or fitness for use of, or any damage to or loss or
destruction of, the Aircraft, or any interruption or cessation in or prohibition
of the use or possession thereof by Lessee (or any Permitted Sublessee) for any
reason, including, without limitation, any such interruption, cessation or
prohibition resulting from the act of any government authority, (iii) any
insolvency, bankruptcy, reorganization or similar case or proceedings by or
against Lessee (or any Permitted Sublessee) or any other person, or (iv) any
other circumstance, happening, or event, whether or not unforeseen or similar to
any of the foregoing. If for any reason this Lease is terminated in whole or in
part by operation of law or otherwise except as specifically provided herein,
Lessee nonetheless agrees without limitation of the other rights or remedies of
Lessor hereunder to pay to Lessor an amount equal to each Rent payment at the
time such payment would have become due and payable in accordance with the terms
hereof had this Lease not been terminated in whole or in part. Lessee hereby
waives, to the extent permitted by applicable law, any and all rights which it
may now have or which at any time hereafter may be conferred upon it, by statute
or otherwise, to terminate, cancel, quit or surrender this Lease except in
accordance with the express terms hereof.
SECTION 19. Renewal Options; Purchase Options; Valuation. (a)
Renewal Options. (1) Fixed Renewal Term. Lessee may renew this Lease for a one
year renewal term which shall commence only upon the expiration of the Basic
Term (the "first Fixed Renewal Term"), a one year renewal term which shall
commence only upon the expiration of the first Fixed Renewal Term (the "second
Fixed Renewal Term"), and a one year renewal term which shall commence only upon
the expiration of the second Fixed Renewal Term (the "third Fixed Renewal Term")
(the first Fixed Renewal Term, the second Fixed Renewal Term and the third Fixed
Renewal Term, each a "Fixed Renewal Term") by notice to Lessor at least 90 days
before the end of the Basic Term, the first Fixed Renewal Term or the second
Fixed Renewal Term, as the case may be, irrevocably electing to renew this Lease
for a Fixed Renewal Term. Basic Rent during any Fixed Renewal Term shall be
payable in an amount and at the times specified in Section 19(a)(4).
(2) Fair Market Renewal Term. At the expiration of the third Fixed
Renewal Term or any Fair Market Renewal Term, Lessee may renew this Lease by
delivery to Lessor of a written notice irrevocably electing to renew this Lease
for a renewal term of not less than one year and not more than three years at a
Basic Rent equal to the "fair market rental value" of the Aircraft for such
period (any such renewal term, a "Fair Market Renewal Term"). Each such right to
renew may be exercised by Lessee notifying Lessor, at least 90 days prior to the
commencement of such Fair Market Renewal Term, of its election irrevocably to
renew this Lease for a Fair Market Renewal Term (which notice shall also specify
the length of the Fair Market Renewal Term).
(3) If no written notice is delivered by Lessee to Lessor pursuant
to Section 19(a)(1) or 19(a)(2) on or before the day specified therefor, Lessee
shall be deemed to have waived any right to renew this Lease.
(4) At the end of the Basic Term or any Renewal Term, if Lessee has
elected to renew this Lease as aforesaid, and provided that there shall not then
have occurred and be continuing an Event of Default and that all necessary
governmental authorizations and approvals shall have been received and that
Basic Rent for the Renewal Term has already been determined as above provided
and a Lease Supplement evidencing such renewal has been executed and filed for
recordation with the FAA, this Lease shall continue in full force and effect
during the Renewal Term, except that (x) Lessee shall pay the Lessor Basic Rent
for the Aircraft during the Renewal Term in an amount equal to the "fair market
rental value" thereof determined in accordance with Section 19(c), each
semi-annual installment of Basic Rent not to exceed in the case of a Fixed
Renewal Term [__]% of the average Basic Rent during the Basic Term (such average
being determined as the total of all payments of Basic Rent during the Basic
Term added together and divided by the number of payments of Basic Rent during
the Basic Term), which Basic Rent shall be payable in semi-annual installments
in arrears, each such installment being due and payable on each Lease Period
Date occurring during the Renewal Term, commencing with the Lease Period Date
immediately following the commencement of the Renewal Term, and (y) the
Stipulated Loss Values applicable during the Renewal Term shall be determined
separately for each Renewal Term by Owner Participant in good faith to reflect
Stipulated Loss Values determined in accordance with the following sentence.
Stipulated Loss Values during a Renewal Term shall on the date on which such
Renewal Term begins be equal to the fair market sales value of the Aircraft as
of such date, determined in accordance with the provisions of this Section
19(a)(4) and Section 19(c), and shall decline ratably on a monthly basis to the
fair market sales value of the Aircraft as of the last day of such Renewal Term,
determined in accordance with the provisions of this Section 19(a)(4) and
Section 19(c).
In determining fair market sales value for purposes of calculating
Stipulated Loss Value for any Renewal Term effect shall be given to the
encumbrance on the Aircraft of any Renewal Term available or in force under this
Section 19.
(b) Purchase Options. Lessee shall have the option, upon at least 60
days' irrevocable prior written notice to Lessor, to purchase the Aircraft on
the last Business Day of the Basic Term or any Renewal Term for a purchase price
equal to the lesser of (x) the fair market sales value of the Aircraft or (y)
50% of Lessor's Cost. Upon payment to Lessor in immediately available funds of
the full amount of the purchase price and payment of any other amounts then due
hereunder (including all Rent and all actual and reasonable out-of-pocket costs
or expenses of Owner Participant in connection with such purchase), Lessor will
transfer to Lessee, without recourse or warranty (except as to the conveyance of
whatever title was received from Lessee and as to the absence of Lessor Liens,
including for this purpose Liens which would be Lessor Liens but for the proviso
in the definition of Lessor Liens), all of Lessor's right, title and interest in
and to the Aircraft.
(c) Valuation. At any time not earlier than 365 days prior to the
date on which Lessee may purchase the Aircraft pursuant to Section 19(b) or
renew this Lease pursuant to Section 19(a)(1) or Section 19(a)(2), Lessee may
deliver to Lessor a revocable notice of its intent to exercise its renewal
option or purchase option. For all purposes of this Section 19, including the
appraisal referred to in this Section 19(c), in determining "fair market rental
value" or "fair market sales value", the Aircraft shall be valued (i) as if in
the condition and otherwise in compliance with the terms of Section 5 upon a
return of the Aircraft in the United States and as if it had been maintained at
all times as required in accordance with Section 7(c) during periods when no
Sublease was in effect, (ii) on the basis of the value which would obtain in an
arm's-length transaction between an informed and willing buyer-user or lessee
(other than a lessee or an affiliate of a lessee currently in possession or a
used equipment scrap dealer) under no compulsion to buy or lease and an informed
and willing seller or lessor unaffiliated with such buyer-user or lessee and
under no compulsion to sell or lease and disregarding the purchase and renewal
options of Lessee provided in this Lease, and (iii) in the case of such
valuation for determining "fair market rental value", assuming such lessee would
have substantially the same obligations during the Renewal Term as provided
hereunder including without limitation the obligations of Lessee to carry and
maintain the insurance required by Section 11 hereof and to make certain
payments with reference to Stipulated Loss Value during the applicable Renewal
Term. Upon receipt of such notice Lessor and Lessee shall confer in good faith
with a view to reaching agreement on the "fair market rental value" or "fair
market sales value" of the Aircraft. If the parties have not so agreed by 270
days prior to the end of the Basic Term or the Renewal Term in question, then
the question shall be determined by an appraisal mutually agreed to by two
recognized independent aircraft appraisers, one of which appraisers shall be
chosen by Lessor and one by Lessee within five Business Days after Lessor or
Lessee have received written notice from the other party of a demand that such
an appraisal be made, which notice shall specify the appraiser chosen by the
party giving the notice or, if such appraisers cannot agree on the amount of
such appraisal within twenty Business Days after the end of such five-day
period, each shall render its own appraisal and shall by mutual consent choose
another appraiser within five Business Days after the end of such twenty-day
period. If, within such five-day period, such two appraisers fail to appoint a
third appraiser, then either Lessor or Lessee, on behalf of both, may request
such appointment by the then President of the Association of the Bar of the City
of New York (or any successor organization thereto) or, in his absence, failure,
refusal or inability to act, then either Lessor or Lessee may apply to the
American Arbitration Association (or any successor organization thereto) in New
York, New York for the appointment of such third appraiser. The decision of the
third appraiser so appointed shall be given within twenty Business Days after
the appointment of such third appraiser. As soon as the third appraiser has
delivered his appraisal, that appraisal shall be compared with the appraisals
given by the other two appraisers. If the determination of one appraiser is more
disparate from the average of all three determinations than each of the other
two determinations, then the determination of such appraiser shall be excluded,
the remaining two determinations shall be averaged and such average shall be
final and binding upon the parties hereto. If no determination is more disparate
from the average of all three determinations than each of the other
determinations, then such average shall be final and binding upon the parties
thereto. Lessee and Lessor shall share equally all expenses relating to such
appraisal procedure provided if Lessee elects not to renew this the Lease or
purchase the Aircraft following such appraisal, Lessee shall pay all expenses of
such appraisal.
(d) Special Purchase Option. Lessee may, upon at least 90 days'
irrevocable notice to Lessor and, if any Equipment Notes are then outstanding,
Loan Trustee, purchase the Aircraft on the EBO Date for a purchase price equal
to[, at Lessee's option, either (a)] the Special Purchase Price[, or (b) the
amount set forth under the heading "Initial Installment" on Exhibit B-1 (the
"Initial Installment") (payable on the EBO Date) plus the Remaining
Installments]. In addition, if on such date there are any Equipment Notes
outstanding, Lessee shall have the option to assume, pursuant to Section 6.01(k)
of the Participation Agreement and Section 2.17 of the Indenture, all of the
obligations of Lessor under the Indenture. If such assumption is made, in lieu
of paying the Special Purchase Price on the EBO Date Lessee shall pay Lessor a
purchase price equal to (I) [(x) if Lessee has elected to pay the Special
Purchase Price,] the Special Purchase Price [or (y) if Lessee has elected to pay
the Initial Installment and the Remaining Installments, the Initial Installment]
minus [in either event] (II) an amount equal to principal of, and accrued but
unpaid interest on, any Equipment Notes that are outstanding on such date. Upon
such payment in full and payment of any other amounts then due hereunder
(including actual and reasonable out-of-pocket costs or expenses of Owner
Participant in connection with such purchase, any installments of Basic Rent
payable prior to such date, and all unpaid Supplemental Rent due on or prior to
such date), [and, in the event that Lessee has elected to pay the Initial
Installment and the Remaining Installments, after Lessee shall have provided
Lessor with its undertaking to pay the amounts payable on the dates set forth
under the heading "Remaining Installments" on Exhibit B-1 (the "Remaining
Installments"),] Lessor will transfer to Lessee, without recourse or warranty
(except as to the conveyance of whatever title was received from Lessee and as
to the absence of Lessor Liens, including for this purpose Liens which would be
Lessor Liens but for the proviso in the definition of Lessor Liens), all of
Lessor's right, title and interest in and to the Aircraft and under the
Indenture and, unless any Equipment Notes are outstanding after such payment,
exercise such rights as it has to cause the Aircraft to be released from the
Lien of the Indenture[; provided, however, that in the event that Lessee has
elected to pay the Initial Installment and the Remaining Installments, Lessor
shall retain a Lien on the Aircraft until the Remaining Installments, together
with interest thereon at the Past Due Rate for any period from the date due to
the date paid, are paid in full, which Lien shall be evidenced by this Lease,
which after the date Lessor has transferred title to the Aircraft to Lessee
shall be deemed terminated as a true lease and shall continue as a lease
intended for security, mutatis mutandis, to secure the payment when due of the
Remaining Installments -- provision permitting utilization of Initial
Installment and Remaining Installments may be utilized only if EBO Date occurs
on or after maturity of Equipment Notes].
SECTION 20. Security for Lessor's Obligation to Holders of Equipment
Notes. In order to secure the indebtedness evidenced by the Equipment Notes,
Lessor has agreed in the Indenture, among other things, to assign to Loan
Trustee this Lease, the Lease Supplements and any amendments to this Lease and
to mortgage its interest in the Aircraft in favor of Loan Trustee, subject to
the reservations and conditions therein set forth. To the extent, if any, that
this Lease, the Lease Supplements and any amendments to this Lease constitute
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in this Lease, the
Lease Supplements and any amendments to this Lease may be created through the
transfer or possession of any counterpart other than the original counterpart,
which shall be identified as the counterpart containing the receipt therefor
executed by Loan Trustee on the signature page thereof. Lessee hereby accepts
and consents to the assignment of all Lessor's right, title and interest in and
to this Lease pursuant to the terms of the Indenture. Subject to Section 3(e),
Lessee agrees to pay directly to Loan Trustee (or, after receipt by Lessee of
notice from Loan Trustee of the discharge of the Indenture, to Lessor), all
amounts of Rent due or to become due hereunder and assigned to Loan Trustee and
Lessee agrees that Loan Trustee's right to such payments hereunder shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, the circumstances set forth in clauses (i)
through (iv) of Section 18. Notwithstanding the foregoing assignment of this
Lease, the obligations of Lessor to Lessee to perform the terms and conditions
of this Lease shall remain in full force and effect.
SECTION 21. Lessor's Right to Perform for Lessee. If Lessee fails to
make any payment of Rent required to be made by it or fails to perform or comply
with any of its agreements contained herein, then (but in each case, except in
the case of failure to pay Rent or in the case of failure to maintain insurance
as required hereunder, no earlier than the fifteenth day after the occurrence of
such failure, whether or not it yet constitutes an Event of Default) Lessor may
itself make such payment or perform or comply with such agreement but is not
obligated hereunder to do so, and the amount of such payment and the amount of
the reasonable expenses of Lessor incurred in connection with such payment or
the performance of or compliance with such agreement, as the case may be,
together with interest thereon at the Past Due Rate, shall be deemed
Supplemental Rent, payable by Lessee upon demand.
SECTION 22. Investment of Security Funds; Liability of Lessor
Limited. (a) Investment of Security Funds. Any moneys held by Lessor as security
hereunder for future payments to Lessee, until paid out by Lessor as herein
provided, shall be invested and reinvested by Lessor (or, if the Indenture has
not been discharged, by Loan Trustee) as Lessee may request 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 Lessor (or, if the Indenture has not been
discharged, by Loan Trustee) as security hereunder for future payments to Lessee
until so sold. Lessee shall upon demand pay to Lessor (or, if the Indenture has
not been discharged, to Loan Trustee) the amount of any loss realized upon
maturity, sale or other disposition of any such Permitted Investment. So long as
no Event of Default or Payment Default has occurred and is continuing, Lessee is
entitled to receive from Lessor (or, if the Indenture has not been discharged,
from Loan Trustee), and Lessor (or, if the Indenture has not been discharged,
Loan Trustee) shall promptly pay to Lessee, 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 has occurred and
is continuing, any net income, profit, interest, dividend or gain realized upon
maturity, sale or other disposition of any Permitted Investment shall be held as
security for future payments to Lessee and shall be applied by Lessor (or, if
the Indenture has not been discharged, 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 pursuant to which such amounts
were required to be held. Neither Lessor nor Loan Trustee is responsible for any
losses on any investments or sales of Permitted Investments made pursuant to the
procedure specified in this Section 22 other than by reason of its willful
misconduct or negligence. If any moneys or investments are held by Lessor (or,
if the Indenture has not been discharged, by Loan Trustee) solely because an
Event of Default has occurred and is continuing and such moneys or investments
have been held for a period of 90 consecutive days during which such Event of
Default is continuing without any remedial action being taken by Lessor or Loan
Trustee in respect of such Event of Default pursuant to Section 15, 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 Lessor (or, if the Indenture
has not been discharged, by Loan Trustee) shall be released to Lessee on such
90th day, or on the next Business Day after such 90th day.
(b) Liability of Lessor Limited. It is expressly agreed and
understood that all representations, warranties and undertakings of Lessor
hereunder shall be binding upon Lessor only in its capacity as trustee under the
Trust Agreement, and the institution acting as Lessor shall not be liable in its
individual capacity for any breach thereof except for its negligence or willful
misconduct or for breach of its covenants, representations and warranties
contained herein, to the extent covenanted or made in its individual capacity.
SECTION 23. Submission to Jurisdiction. Lessor and Lessee each
hereby irrevocably submits itself to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York and to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, New
York County, for the purposes of any suit, action or other proceeding arising
out of this Lease, the subject matter hereof or any of the transactions
contemplated hereby brought by Lessor, Lessee, Loan Trustee, Noteholders or
Owner Participant or their successors or permitted assigns.
SECTION 24. Miscellaneous. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Lease may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by Lessor, Lessee and any assignee of Lessor's
rights hereunder. This Lease shall constitute an agreement of lease, and nothing
contained herein shall be construed as conveying to Lessee any right, title or
interest in the Aircraft except as a lessee only. Neither Lessee nor any
affiliate of Lessee will file any tax returns in a manner inconsistent with the
foregoing fact or with Lessor's ownership of the Aircraft. The section and
paragraph headings in this Lease and the table of contents are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof and all references herein to numbered sections, unless
otherwise indicated, are to sections of this Lease. THIS LEASE HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. This Lease may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 25. Successor Trustee. Lessee agrees that in the case of the
appointment of any successor Owner Trustee pursuant to the terms of the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee, succeed to all the rights, powers and title of Lessor
hereunder and shall be deemed to be Lessor and the owner of the Aircraft for all
purposes hereof without the necessity of any consent or approval by Lessee
(subject to Section 6.01(m) of the Participation Agreement) and without in any
way altering the terms of this Lease or Lessee's obligations hereunder. One such
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor Owner Trustees pursuant to the
Trust Agreement, but such right may be exercised repeatedly as long as this
Lease shall be in effect.
SECTION 26. Covenant of Quiet Enjoyment. So long as no Event of
Default has occurred and is continuing and notwithstanding any default by
Lessor, Owner Participant or Loan Trustee under the Participation Agreement, the
Trust Agreement or the Indenture, neither Lessor nor anyone acting or claiming
by, through or in the name of Lessor may interfere with Lessee's (or any
Permitted Sublessee's) continued possession, use and operation of, and quiet
enjoyment of, the Aircraft during the Term, and this Lease shall not be
terminated except as expressly provided herein.
SECTION 27. Lessee's Performance and Rights. Any obligation imposed
on Lessee herein shall require only that Lessee 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, sublessee or transferee under an
assignment, sublease or transfer agreement then in effect and in accordance with
the provisions of the Operative Documents shall constitute performance by Lessee
and, to the extent of such performance, discharge such obligation by Lessee.
Except as otherwise expressly provided herein, any right granted to Lessee in
this Lease shall grant Lessee the right to permit such right to be exercised by
any such assignee, sublessee or transferee. The inclusion of specific references
to obligations or rights of any such assignee, sublessee or transferee in
certain provisions of this Lease shall not in any way prevent or diminish the
application of the provisions of the two sentences immediately preceding with
respect to obligations or rights in respect of which specific reference to any
such assignee, sublessee or transferee has not been made in this Lease.
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to
be duly executed as of the day and year first above written.
WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual capacity,
except as expressly provided herein, but
solely as Owner Trustee,
Lessor
By: ________________________________________
Name:
Title:
DELTA AIR LINES, INC.,
Lessee
By: ________________________________________
Name:
Title:
Receipt of this original counterpart of the foregoing Lease is
hereby acknowledged on the _____ day of [____________]
STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT,
Loan Trustee
By: ________________________________________
Name:
Title:
EXHIBIT A
to
Lease Agreement
(N____)
LEASE SUPPLEMENT No.
(N____)
Lease Supplement No. __, dated [_________] between WELLS FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement (N____), dated as of [_____________]
between _____________________, as Owner Participant, and such Owner Trustee
(such Owner Trustee, in its capacity as such Owner Trustee, being herein called
"Lessor"), and DELTA Air lines, Inc. ("Lessee").
Lessor and Lessee have heretofore entered into that certain Lease
Agreement (N____), dated as of [___________], relating to one Boeing 737-832
aircraft (herein called the "Lease," and the defined terms therein being
hereinafter used with the same meanings). The Lease provides for the execution
and delivery from time to time of Lease Supplements for the purpose of leasing
the Airframe and Engines under the Lease as and when delivered by Lessor to
Lessee in accordance with the terms thereof.
(1)The Lease relates to the Airframe and Engines described below,
and a counterpart of the Lease is attached hereto, and made a part hereof, and
this Lease Supplement, together with such attachment, is being filed for
recordation on the date hereof with the FAA as one document.
(2)The Lease Agreement relates to the Airframe and Engines described
below, and a counterpart of the Lease Agreement, attached and made a part of
Lease Supplement No. 1 dated [______________] to the Lease Agreement, has been
recorded by the FAA on [_____________], as one document and assigned Conveyance
No. __.
Now, Therefore, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. Lessor hereby delivers and leases to Lessee under the Lease and
Lessee hereby accepts and leases from Lessor under the Lease the following
described aircraft (the "Aircraft"), which Aircraft as of the date hereof
consists of the following components:
(i) AIRFRAME:
Manufacturer Model FAA Registration No. Manufacturer's Serial No.
------------ ----- -------------------- -------------------------
(ii) ENGINES:
Manufacturer Model Manufacturer's Serial No.
------------ ----- -------------------------
Each Engine is of 750 or more "rated takeoff horsepower" or the equivalent of
such horsepower.
2. The Delivery Date of the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof. Except as otherwise
provided in the Lease, the Term for the Aircraft shall commence on the Delivery
Date and end on [___________ __, 20__].
3. Lessee hereby confirms its agreement to pay the Lessor Basic Rent
for the Aircraft throughout the Term therefor in accordance with Section 3 of
the Lease.
4. Lessee hereby confirms to Lessor that Lessee has accepted the
Aircraft for all purposes hereof and of the Lease as being airworthy, in good
working order and repair and without defect or inherent vice in title,
condition, design, operation or fitness for use; provided, however, that nothing
contained herein or in the Lease shall in any way diminish or otherwise affect
any right Lessee or Lessor may have with respect to the Aircraft against The
Boeing Company, or any subcontractor or supplier of The Boeing Company, under
the Purchase Agreement or otherwise.
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. To the extent, if any, that this Lease Supplement constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any jurisdiction), no security interest in this Lease Supplement may
be created through the transfer or possession of any counterpart other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by Loan Trustee on the signature page hereof.
- -------------
(1) This language for Lease Supplement No. 1.
(2) This language for other Lease Supplements.
In Witness Whereof, Lessor and Lessee have caused this Lease
Supplement to be duly executed on the day and year first above written.
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
not in its Individual Capacity,
but solely as Owner Trustee,
Lessor
By: ________________________________________
Name:
Title:
DELTA Air lines, Inc.,
Lessee
By: ________________________________________
Name:
Title:
(3)Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of [______________]
STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT,
Loan Trustee
By: ________________________________________
Name:
Title:
- -------------
(3) This language contained in the original counterpart only.
EXHIBIT B-1
to
Lease Agreement
(N____)
BASIC RENT, LESSOR'S COST
AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Basic Rent:
Lease Period Basic Rent Payable
Date (Percentage of Lessor's Cost)
------------------------ --------------------------------
BASIC RENT, LESSOR'S COST
AND SPECIAL PURCHASE PRICE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Lease Period Basic Rent Payable
Date (Percentage of Lessor's Cost)
------------------------ ---------------------------------
BASIC RENT, LESSOR'S COST
AND SPECIAL PURCHASE PRICE SCHEDULE
Lessor's Cost for the Aircraft: $[___________]
Special Purchase Price: [_____________]% of Lessor's Cost (comprised of an
early buy-out amount of [_______]% of Lessor's Cost plus the Cumulative Basic
Rent Allocation of [_______]% of Lessor's Cost minus Cumulative Basic Rent
Payments of [________]% of Lessor's Cost) on [______________].
[Initial Installment: [__]% of Lessor's Cost on [ ].
Remaining Installments: Date Amount
---- ------
April 15, [ ] [__]% of Lessor's Cost
June 15, [ ] [__]% of Lessor's Cost
September 15, [ ] [__]% of Lessor's Cost
December 15, [ ] [__]% of Lessor's Cost]
EXHIBIT B-2
to
Lease Agreement
(N____)
BASIC RENT ALLOCATION SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Lease Period Basic Rent Allocated
From To (Percentage of Lessor's Cost)
- ----------------------------------------- -----------------------------------
EXHIBIT C
to
Lease Agreement
(N____)
STIPULATED LOSS VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Stipulated Loss Stipulated Loss
Value Percentage Value Percentage
Stipulated Loss Before Basic Rent Cumulative Allocated Cumulative Cash Basic After Basic Rent
Value Date Adjustments Basic Rent to Date Rent to Date Adjustments
- ----------------- ------------------- ---------------------- ----------------------- -------------------
STIPULATED LOSS VALUE SCHEDULE
Stipulated Loss Stipulated Loss
Value Percentage Value Percentage
Stipulated Loss Before Basic Rent Cumulative Allocated Cumulative Cash Basic After Basic Rent
Value Date Adjustments Basic Rent to Date Rent to Date Adjustments
- ----------------- ------------------- ---------------------- ----------------------- -------------------
STIPULATED LOSS VALUE SCHEDULE
Stipulated Loss Stipulated Loss
Value Percentage Value Percentage
Stipulated Loss Before Basic Rent Cumulative Allocated Cumulative Cash Basic After Basic Rent
Value Date Adjustments Basic Rent to Date Rent to Date Adjustments
- ----------------- ------------------- ---------------------- ----------------------- -------------------
STIPULATED LOSS VALUE SCHEDULE
Stipulated Loss Stipulated Loss
Value Percentage Value Percentage
Stipulated Loss Before Basic Rent Cumulative Allocated Cumulative Cash Basic After Basic Rent
Value Date Adjustments Basic Rent to Date Rent to Date Adjustments
- ----------------- ------------------- ---------------------- ----------------------- -------------------
STIPULATED LOSS VALUE SCHEDULE
Stipulated Loss Stipulated Loss
Value Percentage Value Percentage
Stipulated Loss Before Basic Rent Cumulative Allocated Cumulative Cash Basic After Basic Rent
Value Date Adjustments Basic Rent to Date Rent to Date Adjustments
- ----------------- ------------------- ---------------------- ----------------------- -------------------
STIPULATED LOSS VALUE SCHEDULE
Stipulated Loss Stipulated Loss
Value Percentage Value Percentage
Stipulated Loss Before Basic Rent Cumulative Allocated Cumulative Cash Basic After Basic Rent
Value Date Adjustments Basic Rent to Date Rent to Date Adjustments
- ----------------- ------------------- ---------------------- ----------------------- -------------------
STIPULATED LOSS VALUE SCHEDULE
Stipulated Loss Stipulated Loss
Value Percentage Value Percentage
Stipulated Loss Before Basic Rent Cumulative Allocated Cumulative Cash Basic After Basic Rent
Value Date Adjustments Basic Rent to Date Rent to Date Adjustments
- ----------------- ------------------- ---------------------- ----------------------- -------------------
EXHIBIT D
to
Lease Agreement
(N____)
TERMINATION VALUE SCHEDULE
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Termination Value Termination Value
Percentage Before Percentage After
Basic Rent Cumulative Allocated Cumulative Cash Basic Basic Rent
Termination Date Adjustments Basic Rent to Date Rent to Date Adjustments
- -------------------- ------------------- ---------------------- ----------------------- --------------------
EXHIBIT E
to
Lease Agreement
(N____)
RENT RECALCULATION VERIFICATION
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
1. Any recalculation of Basic Rent percentages or allocations,
Stipulated Loss Value percentages, Termination Value percentages, [the Initial
Installment, the Remaining Installments] and the Special Purchase Price pursuant
to the Lease shall be determined in good faith by Owner Participant, and shall
maintain Owner Participant's Net Economic Return except as assumptions have been
modified pursuant to Section 3 of the Lease or pursuant to the Tax Indemnity
Agreement or the Participation Agreement, as the case may be; provided, however,
that Lessee may request (A) Lessee's independent public accountants to verify
such calculations but without any requirement that Owner Participant disclose to
such persons the methodology and assumptions and (B) if Lessee believes that
such calculations by Owner Participant are in error then a nationally recognized
firm of accountants or a nationally recognized firm of lease advisors selected
by Lessee and reasonably acceptable to Owner Participant shall be permitted to
verify such calculations and Owner Participant will make available to such firm
(subject to the execution by such firm of a confidentiality agreement reasonably
acceptable to Owner Participant) the methodology and assumptions and any changes
made therein pursuant to Section 3 of the Lease. In the event of a verification
under clause (B) of the first sentence of this paragraph 1 the determination by
such firm of accountants or lease advisors shall be final. Lessee will pay the
reasonable and actual costs and expenses of the verification under clause (B) of
the first sentence of this paragraph 1 unless an error adverse to Lessee is
established by such firm, and if as a result of such verification process the
Basic Rent is adjusted and such adjustment causes the Net Present Value of Rents
to decline by [_] or more basis points (in which event Owner Participant shall
pay the reasonable and actual costs and expenses of such verification process).
Such recalculated Basic Rent percentages and allocations, Stipulated Loss Value
percentages, Termination Value percentages[, Initial Installment, Remaining
Installments] and Special Purchase Price shall be set forth in a Lease
Supplement or an amendment to the Lease.
2. "Net Economic Return" means Owner Participant's net after-tax
yield and aggregate after-tax cash flow, in each case computed from the Delivery
Date through the EBO Date and through [___________________], utilizing the
multiple investment sinking fund method of analysis, computed on the basis of
the same methodology and assumptions as were utilized by Owner Participant in
determining Basic Rent percentages and allocations, the Special Purchase Price,
[the Initial Installment, the Remaining Installments,] Stipulated Loss Value and
Termination Value percentages as of the Delivery Date.
EXHIBIT F
to
Lease Agreement
(N____)
AIRCRAFT TYPE VALUE FOR SECTION 11(b)
Boeing 737-832 - $8,000,000
EXHIBIT I TO
PARTICIPATION AGREEMENT
FORM OF AMENDED AND RESTATED
INDENTURE AND SECURITY AGREEMENT
AMENDED AND RESTATED INDENTURE AND SECURITY AGREEMENT
(N[_____])
Dated as of [________ __, 200_]
between
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly stated herein,
but solely as Owner Trustee,
and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Loan Trustee
---------------------
One Boeing 737-832 Aircraft
U.S. Registration No. N[_____]
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions..................................................
Section 1.02 Other Definitional Provisions................................
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01 Form of Equipment Notes......................................
Section 2.02 Issuance and Terms of Equipment Notes........................
Section 2.03 Method of Payment............................................
Section 2.04 Withholding Taxes............................................
Section 2.05 Application of Payments......................................
Section 2.06 Termination of Interest in Indenture Estate..................
Section 2.07 Registration, Transfer and Exchange of Equipment Notes.......
Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment Notes.........
Section 2.09 Payment of Expenses on Transfer; Cancellation................
Section 2.10 Mandatory Redemption of Equipment Notes......................
Section 2.11 Voluntary Redemption of Equipment Notes......................
Section 2.12 Redemptions; Notice of Redemptions; Repurchases..............
Section 2.13 Subordination................................................
Section 2.14 Certain Payments.............................................
Section 2.15 Repayment of Monies for Equipment Note Payments Held by
Loan Trustee................................................
Section 2.16 Directions by Subordination Agent............................
Section 2.17 Assumption of Equipment Notes by Lessee......................
Section 2.18 Payments from Indenture Estate Only.........................
Section 2.19 Option to Purchase Equipment Notes...........................
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE INDENTURE ESTATE
Section 3.01 Basic Rent Distributions.....................................
Section 3.02 Event of Loss; Voluntary Termination; Refinancing............
Section 3.03 Payments after Indenture Event of Default....................
Section 3.04 Certain Payments.............................................
Section 3.05 Other Payments...............................................
Section 3.06 Payments to Owner Trustee....................................
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF LOAN
TRUSTEE
Section 4.01 Covenants of Owner Trustee..................................
Section 4.02 Indenture Events of Default..................................
Section 4.03 Certain Rights...............................................
Section 4.04 Remedies.....................................................
Section 4.05 Return of Aircraft...........................................
Section 4.06 Remedies Cumulative..........................................
Section 4.07 Discontinuance of Proceedings................................
Section 4.08 Waiver of Past Defaults......................................
Section 4.09 Appointment of a Receiver....................................
Section 4.10 Loan Trustee Authorized to Execute Bills of Sale, Etc. ......
Section 4.11 Rights of Noteholders to Receive Payment.....................
Section 4.12 Noteholders May Not Bring Suit Except Under Certain
Conditions..................................................
ARTICLE V
DUTIES OF LOAN TRUSTEE
Section 5.01 Notice of Indenture Event of Default.........................
Section 5.02 Action upon Instructions; Certain Rights and Limitations.....
Section 5.03 Indemnification..............................................
Section 5.04 No Duties Except as Specified in Indenture or Instructions...
Section 5.05 No Action Except under Lease, Indenture or Instructions......
Section 5.06 Replacement Airframes and Replacement Engines................
Section 5.07 Indenture Supplements for Replacements.......................
Section 5.08 Effect of Replacement........................................
Section 5.09 Investment of Amounts Held by Loan Trustee...................
ARTICLE VI
OWNER TRUSTEE AND LOAN TRUSTEE
Section 6.01 Acceptance of Trusts and Duties..............................
Section 6.02 Absence of Certain Duties....................................
Section 6.03 No Representations or Warranties as to Aircraft or the
Documents...................................................
Section 6.04 No Segregation of Monies; No Interest........................
Section 6.05 Reliance; Agents; Advice of Counsel..........................
Section 6.06 Capacity in Which Acting.....................................
Section 6.07 Compensation.................................................
Section 6.08 Instructions from Noteholders................................
ARTICLE VII
INDEMNIFICATION OF LOAN TRUSTEE BY OWNER TRUSTEE
Section 7.01 Scope of Indemnification.....................................
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
Section 8.01 Notice of Successor Owner Trustee............................
Section 8.02 Resignation and Removal of Loan Trustee; Appointment of
Successor...................................................
Section 8.03 Appointment of Additional and Separate Trustees..............
ARTICLE IX
SUPPLEMENTS, AMENDMENTS AND WAIVERS
Section 9.01 Instructions of Majority; Limitations........................
Section 9.02 Trustees Protected...........................................
Section 9.03 Documents Mailed to Noteholders..............................
Section 9.04 No Request Necessary for Lease Supplement and Indenture
Supplement..................................................
Section 9.05 Notation on or Exchange of Equipment Notes...................
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination of Indenture.....................................
Section 10.02 No Legal Title to Indenture Estate in Noteholders............
Section 10.03 Sale of Aircraft by Loan Trustee is Binding..................
Section 10.04 Indenture for Benefit of Owner Trustee, Owner
Participant, Lessee, Loan Trustee and Noteholders...........
Section 10.05 Notices......................................................
Section 10.06 Severability.................................................
Section 10.07 No Oral Modification or Continuing Waivers...................
Section 10.08 Successors and Assigns.......................................
Section 10.09 Headings.....................................................
Section 10.10 Normal Commercial Relations..................................
Section 10.11 Voting by Noteholders........................................
Section 10.12 Section 1110.................................................
Section 10.13 Counterparts.................................................
Section 10.14 Governing Law................................................
Section 10.15 No Action Contrary to Lessee's Rights Under the Lease........
Section 10.16 Submission to Jurisdiction...................................
Exhibit A - Form of Indenture Supplement
Schedule I - Description of Equipment Notes
Schedule II - Pass Through Trust Agreement and Pass Through Trust Supplements
Annex A - Definitions
AMENDED AND RESTATED INDENTURE AND SECURITY AGREEMENT
(N[_____])
By the execution and delivery of this Agreement, (1) Owner Trustee
(as hereinafter defined) does hereby assume the indebtedness and other
obligations of Delta Air Lines, Inc. ("Lessee") under the Indenture and Security
Agreement (N____), dated as of April 30, 2002, between Lessee and Loan Trustee
(as hereinafter defined) as supplemented by the Supplement (as hereinafter
defined) (said Indenture and Security Agreement (N_____) as supplemented by the
Supplement, the "Original Indenture") as amended and restated below and the
indebtedness and other obligations of Lessee under the Original Equipment Notes
(as such term is defined Annex A hereto) (provided that Noteholders and Loan
Trustee agree to look only to Lessee and that Lessee shall be solely responsible
for claims with respect to indemnity and all other obligations (other than as to
interest accruing after the Delivery Date and as to principal amount) arising,
or as a result of actions or omissions occurring, prior to the Delivery Date; it
being understood that nothing in the foregoing proviso is intended to omit from
Owner Trustee's assumption, or relieve Owner Trustee from, the obligation to pay
the principal amount or interest accruing from and after the Delivery Date
thereon or performing or observing any other obligations set forth below from
and after the Delivery Date), and (2) Loan Trustee (as hereinafter defined) does
hereby release the Collateral (as such term is defined in the Original
Indenture) described in paragraph (2) of the Granting Clause of the Original
Indenture from the Lien of the Original Indenture, said Indenture and Security
Agreement (N_____) and the Indenture Supplement (N_____) (the "Supplement")
dated April 30, 2002, having been recorded with the Federal Aviation
Administration on [_______ __], 2002 and assigned Conveyance No. [________], and
the Original Indenture is hereby amended and restated in its entirety to read as
follows:
This AMENDED AND RESTATED INDENTURE AND SECURITY AGREEMENT
(N[_____]), dated as of [________ __, 200_], is made by and between WELLS FARGO
BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly stated herein, but solely as Owner
Trustee under the Trust Agreement referred to below (together with its
successors under the Trust Agreement, "Owner Trustee"), and STATE STREET BANK
AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as expressly stated herein,
but solely as Loan Trustee hereunder (together with its permitted successors
hereunder, "Loan Trustee").
W I T N E S S E T H:
WHEREAS, Owner Participant and Owner Trustee have entered into the
Trust Agreement whereby, among other things, (i) Owner Trustee has established a
certain trust for the use and benefit of Owner Participant subject, however, to
the Indenture Estate created pursuant hereto for the use and benefit of, and
with the priority of payment to, the holders of Equipment Notes issued
hereunder, and (ii) Owner Trustee has been authorized and directed to execute
and deliver this Indenture;
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 Owner Trustee
of the Equipment Notes evidencing the participation of Pass Through Trustees in
the payment of Lessor's Cost for the Aircraft, as provided in the Participation
Agreement and (ii) the assignment, mortgage and pledge by Owner Trustee to Loan
Trustee, as part of the Indenture Estate hereunder, among other things, of all
of Owner Trustee's estate, right, title and interest in and to the Aircraft and,
except as hereinafter expressly provided, all of Owner Trustee's right, title
and interest in, to and under the Lease and all payments and other amounts
received hereunder or thereunder in accordance with the terms hereof or thereof,
as security for, among other things, Owner Trustee'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 Owner Trustee and authenticated and delivered by Loan Trustee
hereunder, the valid, binding and enforceable obligations of Owner Trustee; and
WHEREAS, all things necessary to make this Indenture a legal, valid
and binding obligation of Owner Trustee for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
occurred;
GRANTING CLAUSE
NOW, THEREFORE, to secure the prompt and complete payment (whether
at stated maturity, by acceleration or otherwise) of principal of, Make-Whole
Amount, if any, and interest on, the Equipment Notes and all other amounts
payable by Owner Trustee or Lessee under the Operative Documents to Noteholders
and Indenture Indemnitees and the performance and observance by Owner Trustee of
all the agreements and covenants to be performed or observed by Owner Trustee
for the benefit of Noteholders and Indenture Indemnitees contained in the
Operative Documents, and in consideration of the premises and of the covenants
contained in the Operative Documents, and for other good and valuable
consideration given by Loan Trustee, Noteholders and Indenture Indemnitees to
Owner Trustee at or before the Delivery Date, the receipt of which is hereby
acknowledged, Owner Trustee 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 Owner Trustee in,
to and under, all and singular, the following described properties, rights,
interests and privileges whether now or hereafter acquired, other than Excluded
Payments (hereinafter sometimes referred to as the "Indenture Estate"):
(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 to which Owner Trustee shall from time to time
acquire title as provided herein and in the Lease (such Airframe and
Engines as more particularly described in the Indenture Supplement
executed and delivered with respect to the Aircraft on the Delivery 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 Lease and any Lease Supplement and all Rent thereunder
(including, without limitation, all amounts of Basic Rent, Supplemental
Rent and payments of any kind thereunder (excluding any Excluded
Payments));
(3) the Purchase Agreement (to the extent specified in the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the
Manufacturer's Consent and the Bill of Sale;
(4) all rents, issues, profits, revenues and other income of the
property subjected or required to be subjected to the lien of this
Indenture;
(5) all 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 Lessee and in excess of that required under
Section 11 of the Lease, and excluding insurance proceeds described in
clauses (ii) and (iii) of the definition of Excluded Payments;
(6) all rights of Owner Trustee to amounts paid or payable by Lessee
to Owner Trustee under the Participation Agreement and all rights of Owner
Trustee to enforce payments of any such amounts thereunder, but excluding
amounts described in clauses (i) and (v) (and clauses (vii) and (viii) as
they relate thereto) of the definition of Excluded Payments;
(7) all moneys and securities now or hereafter paid or deposited or
required to be paid or deposited to or with Loan Trustee to any term of
any Operative Document and held or required to be held by Loan Trustee
hereunder or thereunder (other than Excluded Payments); and
(8) all proceeds of the foregoing;
BUT EXCLUDING from the foregoing and from the Indenture Estate all
Excluded Payments, and the right to enforce and collect the same, and SUBJECT TO
all of the terms and conditions of this Indenture and the rights of Owner
Trustee and Owner Participant hereunder.
Concurrently with the delivery hereof, Owner Trustee is delivering
to Loan Trustee the original executed counterpart of the Lease (to which a
chattel paper receipt is attached), and executed copies of the Participation
Agreement, the Purchase Agreement Assignment and the Manufacturer's Consent.
TO HAVE AND TO HOLD all and singular the aforesaid property unto
Loan Trustee, and its successors and permitted assigns, in trust for the ratable
benefit and security of Noteholders and Indenture Indemnitees, except as
otherwise provided in this Indenture, including Section 2.13 and Article III,
without any preference, distinction or priority of any one Equipment Note over
any other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and in all cases and as to all property specified in paragraphs (1)
through (8) inclusive above, subject to the terms and provisions set forth in
this Indenture.
It is expressly agreed that anything herein contained to the
contrary notwithstanding, Owner Trustee shall remain liable under each of the
Indenture Agreements to which it is a party to perform all of the obligations
assumed by it thereunder, except to the extent prohibited or excluded from doing
so pursuant to the terms and provisions hereof, and Loan Trustee and Noteholders
shall have no obligation or liability under the Indenture Agreements, by reason
of or arising out of the assignment hereunder, nor shall Loan Trustee or
Noteholders be required or obligated in any manner to perform or fulfill any
obligations of Owner Trustee under or pursuant to any of the Indenture
Agreements to which it is a party, or, except as herein expressly provided, to
make any payment, or to make any inquiry as to the nature or sufficiency of any
payment received by it, or present or file any claim or take any action to
collect or enforce the payment of any amounts that may have been assigned to it
or to which it may be entitled at any time or times.
Owner Trustee does hereby constitute Loan Trustee the true and
lawful attorney of Owner Trustee (which appointment is coupled with an interest)
irrevocably, granted for good and valuable consideration, with full power of
substitution and with full power (in the name of Owner Trustee or otherwise) to
ask, require, demand and receive any and all monies and claims for monies (in
each case including insurance and requisition proceeds but in all cases
excluding Excluded Payments) due and to become due under or arising out of the
Indenture Agreements, and all other property which now or hereafter constitutes
part of the Indenture Estate, to endorse any checks or other instruments or
orders in connection therewith and to file any claims or to take any action or
to institute any proceedings which Loan Trustee may deem to be necessary or
advisable in the premises. Without limiting the generality of the foregoing, but
subject to the rights of Owner Trustee and Owner Participant hereunder, during
the continuance of any Indenture Event of Default, Loan Trustee shall have the
right under such power of attorney to accept any offer in connection with the
exercise of remedies as set forth herein of any purchaser to purchase the
Airframe and Engines and upon such purchase to execute and deliver in the name
of and on behalf of Owner Trustee an appropriate bill of sale and other
instruments of transfer relating to the Airframe and Engines, when purchased by
such purchaser, and to perform all other necessary or appropriate acts with
respect to any such purchase, and in its discretion to file any claim or take
any other action or proceedings, either in its own name or in the name of Owner
Trustee or otherwise, which Loan Trustee may deem necessary or appropriate to
protect and preserve the right, title and interest of Loan Trustee in and to
such Rents and other sums and the security intended to be afforded hereby;
provided, however, that no action of Loan Trustee pursuant to this paragraph
shall increase the obligations or liabilities of Owner Trustee to any Person
beyond those obligations and liabilities specifically set forth in this
Indenture and in the other Operative Documents.
Under the Lease, Lessee is directed, so long as this Indenture shall
not have been fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be paid to or
deposited with Owner Trustee pursuant to the Lease (other than Excluded
Payments) directly to, or as directed by, Loan Trustee at such address or
addresses as Loan Trustee shall specify, for application as provided in this
Indenture. Owner Trustee agrees that promptly upon receipt thereof, it will
transfer to Loan Trustee any and all monies from time to time received by it
constituting part of the Indenture Estate, for distribution by Loan Trustee
pursuant to this Indenture, except that Owner Trustee shall accept for
distribution pursuant to the Trust Agreement any amounts distributed to it by
Loan Trustee under this Indenture.
Owner Trustee agrees that at any time and from time to time, upon
the written request of Loan Trustee, Owner Trustee 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 Owner Trustee will
not expand any obligations or limit any rights of Owner Trustee in respect of
the transactions contemplated by the Operative Documents. The parties hereto
acknowledge that neither Owner Trustee nor Owner Participant shall have any
obligation as to any recording, filing, refiling or re-recording of any
documents or instruments in regard to maintaining the perfection of the security
interests created hereunder, in the Indenture Estate or any security interest
that may be claimed to have been created by the Lease or the ownership interest
of Owner Trustee in the Aircraft.
Owner Trustee 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, and that it will not, except as otherwise provided in this Indenture
and except with respect to Excluded Payments to which it is entitled, (i) accept
any payment from Lessee under any Indenture Agreement, (ii) enter into any
agreement amending or supplementing any Indenture Agreement, (iii) execute any
waiver or modification of, or consent under, the terms of, or exercise any
rights, powers or privileges under, any Indenture Agreement, (iv) settle or
compromise any claim (other than those relating to an Excluded Payment) arising
under any Indenture Agreement or (v) submit or consent to the submission of any
dispute, difference or other matter arising under or in respect of any Indenture
Agreement to arbitration thereunder.
Owner Trustee does hereby further agree that it will not without the
written consent of Loan Trustee:
(a) collect or agree to the receipt or collection of any
payment of Rent (other than Excluded Payments), including
Basic Rent, Stipulated Loss Value, Termination Value or any
other payment to be made pursuant to Section 9 or 10 of the
Lease prior to the date for the payment thereof provided
for by the Lease or assign, transfer or hypothecate (other
than to Loan Trustee hereunder) any payment of Rent (other
than Excluded Payments), including Basic Rent, Stipulated
Loss Value, Termination Value or any other payment to be
made pursuant to Section 9 or 10 of the Lease, then due or
to accrue in the future under the Lease in respect of the
Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in connection
with the appointment of a successor owner trustee, sell,
mortgage, transfer, assign or hypothecate (other than to
Loan Trustee hereunder) its interest in the Airframe and
Engines or any part thereof or in any amount to be received
by it from the use or disposition of the Airframe and
Engines, other than amounts distributed to it pursuant to
Article III hereof.
It is hereby further agreed that any and all property described or
referred to in the granting clauses hereof which is hereafter acquired by Owner
Trustee shall ipso facto, and without any further conveyance, assignment or act
on the part of Owner Trustee or Loan Trustee, become and be subject to the Lien
herein granted as fully and completely as though specifically described herein,
but nothing contained in this paragraph shall be deemed to modify or change the
obligations of Owner Trustee contained in the foregoing paragraphs.
Owner Trustee does hereby ratify and confirm the Lease and does
hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any of the other Operative Documents to which Owner
Trustee is a party.
Notwithstanding the Granting Clause or any of the foregoing
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all Excluded Payments.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto
as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. For all purposes of this Indenture, unless
the context otherwise requires, capitalized terms used but not defined herein
have the respective meanings set forth or incorporated by reference in Annex A.
Section 1.02 Other Definitional Provisions. (a) The definitions
stated herein and in Annex A apply equally to both the singular and the plural
forms of the terms defined.
(b) All references in this Indenture to designated "Articles",
"Sections", "Subsections", "Schedules", "Exhibits", "Annexes" and other
subdivisions are to the designated Article, Section, Subsection, Schedule,
Exhibit, Annex or other subdivision of this Indenture, unless otherwise
specifically stated.
(c) The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision.
(d) Unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, they shall be deemed to be
followed by the phrase "without limitation".
(e) All references in this Indenture to a "government" are to such
government and any instrumentality or agency thereof.
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01 Form of Equipment Notes. The Equipment Notes shall be
substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. ACCORDINGLY,
THIS EQUIPMENT NOTE MAY NOT BE OFFERED FOR SALE OR SOLD UNLESS
EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE OR OTHER
LAWS OR EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS ARE
AVAILABLE.
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT (N____)
DATED AS OF [_______________]
SERIES 2002-1 [___] NON-RECOURSE EQUIPMENT NOTE DUE [___]
ISSUED IN CONNECTION WITH THE BOEING 737-832 AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N[_____]
No.____ Date: [______,__]
$________________
INTEREST RATE MATURITY DATE
[____] [___________,_____]
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
"Owner Trustee") under that certain Trust Agreement (N ____), dated as of
[_______________], between Owner Participant named therein and Wells Fargo
(herein as such Trust Agreement may be supplemented or amended from time to time
called the "Trust Agreement") hereby promises to pay to ___________, or the
registered assignee thereof, the principal amount of ________________ Dollars
($_________) [on __________](1) [in installments on the Payment Dates set forth
in Schedule I hereto, each such installment to be in an amount computed by
multiplying the original principal amount of this Equipment Note by the
percentage set forth in Schedule I hereto opposite the Payment Date on which
such installment is due,](2) and to pay interest in arrears on each Payment Date
at the Debt Rate on the principal amount remaining unpaid from time to time
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) from the date hereof until paid in full. [Notwithstanding the foregoing,
the final payment made on this Equipment Note shall be in an amount sufficient
to discharge in full the unpaid principal amount and all accrued and unpaid
interest on, and any other amounts due under, this Equipment Note.]2
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Equipment Note becomes due and payable is not a Business
Day, then such payment shall not be made on such scheduled date but shall be
made on the next succeeding Business Day with the same force and effect as if
made on such scheduled date, and if such payment is made on such next succeeding
Business Day, no interest shall accrue on the amount of such payment from and
after such scheduled date.
For purposes hereof, the term "Indenture" means the Amended and
Restated Indenture and Security Agreement (N[_____]), dated as of [_________ __,
200_], between Owner Trustee and State Street Bank and Trust Company of
Connecticut, National Association, as Loan Trustee ("Loan Trustee"), as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms. All capitalized terms used in this Equipment Note and
not defined herein, unless the context otherwise requires, shall have the
respective meanings set forth or incorporated by reference, and shall be
construed and interpreted in the manner described, in the Indenture. This
Equipment Note shall bear interest, payable on demand, at the Past Due Rate (and
not the Debt Rate) (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any principal amount and (to the extent permitted by
applicable law) Make-Whole Amount, if any, interest and any other amounts
payable hereunder not paid when due for any period during which the same is
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid in the manner provided herein or in the Indenture when due
(whether at stated maturity, by acceleration or otherwise).
All payments of principal amount, interest, Make-Whole Amount, if
any, and other amounts, if any, to be made by Owner Trustee hereunder and under
the Indenture shall be payable only from the income and proceeds from the Trust
Estate to the extent included in the Indenture Estate and only to the extent
that Owner Trustee shall have sufficient income or proceeds from the Trust
Estate to the extent included in the Indenture Estate to enable Loan Trustee to
make such payments in accordance with the terms of Section 2.18 and Article III
of the Indenture and each holder hereof, by its acceptance of this Equipment
Note, agrees that it will look solely to the income and proceeds from the
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of Owner Participant, Owner Trustee or Loan
Trustee is personally liable or liable in any manner extending to any assets
other than the Indenture Estate to the holder hereof for any amounts payable or
any liability under this Equipment Note or, except as provided in the Indenture
or in the Participation Agreement, for any liability under the Indenture or the
Participation Agreement; provided, however, that nothing herein contained shall
limit, restrict or impair the right of Loan Trustee, subject always to the terms
and provisions of the Indenture, to accelerate the maturity of this Equipment
Note upon occurrence of an Indenture Event of Default in accordance with Section
4.04 of the Indenture, to bring suit and obtain a judgment against Owner Trustee
on this Equipment Note for purposes of realizing upon the Indenture Estate and
to exercise all rights and remedies provided under the Indenture or otherwise
realize upon the Indenture Estate.
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. Owner Trustee shall not have any responsibility for the
distribution of any such payment to Noteholder of this Equipment Note. Each such
payment shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in the case of any
final payment with respect to this Equipment Note, the Equipment Note shall be
surrendered to Loan Trustee for cancellation. The holder hereof, by its
acceptance of this Equipment Note, agrees that, except as provided in the
Indenture, including the subordination provisions referred to below, each
payment of an installment of principal amount, Make-Whole Amount, if any, and
interest received by it hereunder shall be applied: first, to the payment of
accrued interest on this Equipment Note (as well as any interest on any overdue
principal amount, and, to the extent permitted by law, any overdue Make-Whole
Amount, if any, any overdue interest and other overdue amounts hereunder) to the
date of such payment; second, to the payment of Make-Whole Amount, if any, and
third, to the payment of the principal amount of this Equipment Note (or portion
hereof) then due.
This Equipment Note is one of the Equipment Notes referred to in the
Indenture which have been or are to be issued by Owner Trustee pursuant to the
terms of the Indenture. The Indenture Estate is held by Loan Trustee as
security, in part, for the Equipment Notes. The provisions of this Equipment
Note are subject to the Indenture and the Participation Agreement. Reference is
hereby made to the Indenture and the Participation Agreement for a complete
statement of the rights and obligations of the holder of, and the nature and
extent of the security for, this Equipment Note and the rights and obligations
of the holders of, and the nature and extent of the security for, any other
Equipment Notes executed and delivered under the Indenture, to all of which
terms and conditions in the Indenture and the Participation Agreement each
holder hereof agrees by its acceptance of this Equipment Note.
As provided in the Indenture and subject to certain limitations
therein set forth, this Equipment Note is exchangeable for a like aggregate
principal amount of Equipment Notes of the same Series of different authorized
denominations, as requested by the holder surrendering the same. Prior to the
due presentment for registration of transfer of this Equipment Note, Owner
Trustee 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 Owner Trustee
nor Loan Trustee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in Sections
2.10 and 2.11 of the Indenture but not otherwise. This Equipment Note is also
subject to assumption by Lessee as provided in Section 2.17 of the Indenture, to
exchange and to purchase by Owner Participant or Owner Trustee as provided in
Section 2.19 of the Indenture, but not otherwise.
The indebtedness evidenced by this Equipment Note [shall rank in
right of payment equally with all Series G-2 Equipment Notes and all other
Series G-1 Equipment Notes.](3) [shall rank in right of payment equally with all
Series G-1 Equipment Notes and all other Series G-2 Equipment Notes.](4) [is, to
the extent and in the manner provided in the Indenture, subordinate and subject
in right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series G-1 Equipment Notes and Series
G-2 Equipment Notes](5), and this Equipment Note is issued subject to such
provisions.](6) Noteholder of this Equipment Note, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs Loan
Trustee on such Noteholder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints Loan Trustee such Noteholder's attorney-in-fact for such purpose.
[Without limiting the foregoing, the](7) [The](8) Noteholder of this
Equipment Note, by accepting the same, agrees that if such Noteholder, in its
capacity as a Noteholder, receives any payment or distribution on any Secured
Obligation in respect of this Equipment Note that it is not entitled to receive
under Section 2.13 or Article III of the Indenture, it shall hold any amount so
received in trust for Loan Trustee and forthwith turn over such amount to Loan
Trustee in the form received to be applied as provided in Article III of the
Indenture. Unless the certificate of authentication hereon has been executed by
or on behalf of Loan Trustee by manual signature, this Equipment Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
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, Owner Trustee has caused this Equipment Note to
be executed in its corporate name by its officer thereunto duly authorized on
the date hereof.
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Owner Trustee
By:____________________________________
Name:
Title:
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not
in its individual capacity but solely
as Loan Trustee
By:____________________________________
Name:
Title:
- -------------
(1) To be inserted in non-installment Equipment Notes.
(2) To be inserted in installment Equipment Notes.
(3) To be inserted in the case of a Series G-1 Equipment Note.
(4) To be inserted in the case of a Series G-2 Equipment Note.
(5) To be inserted in the case of a Series C Equipment Note.
(6) To be inserted in the case of a Series C Equipment Note.
(7) To be inserted in the case of a Series C Equipment Note.
(8) To be inserted in the case of a Series G-1 Equipment Note or a Series G-2
Equipment Note.
SCHEDULE I(9)
EQUIPMENT NOTE AMORTIZATION
Payment Date Percentage of Original
Principal Amount
to be Paid
[SEE "EQUIPMENT NOTES AMORTIZATION" ON SCHEDULE I TO
INDENTURE WHICH IS TO BE INSERTED UPON ISSUANCE]
* * *
Section 2.02 Issuance and Terms of Equipment Notes. The Equipment
Notes shall be dated the date of issuance thereof, shall be issued in (a) three
separate series consisting of Series G-1 Equipment Notes, Series G-2 Equipment
Notes, and Series C Equipment Notes and (b) the maturities and principal amounts
and shall bear interest at the applicable Debt Rates specified in Schedule I. On
the Delivery Date, each Series G-1 Equipment Note, Series G-2 Equipment Note,
and Series C Equipment Note shall be issued to Subordination Agent on behalf of
each of Pass Through Trustees for the Pass Through Trusts created under the Pass
Through Trust Agreements referred to in Schedule II. The Equipment Notes shall
be issued in registered form only. The Equipment Notes shall be issued in
denominations of $1,000 and integral multiples thereof, except that one
Equipment Note of each Series may be in an amount that is not an integral
multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate (calculated
on the basis of a year of 360 days comprised of twelve 30-day months), payable
in arrears on each Payment Date on the unpaid principal amount thereof from time
to time outstanding until such principal amount is paid in full, as further
provided in the form of Equipment Note set forth in Section 2.01. The principal
amount of each Series G-1 Equipment Note and each Series C Equipment Note shall
be payable in installments on the Payment Dates and in the installments equal to
the corresponding percentage of the principal amount set forth in Schedule I
hereto applicable to such Series, which shall be attached as Schedule I to such
Equipment Note. The principal amount of each Series G-2 Equipment Note shall be
due in a single payment on July 2, 2012. Notwithstanding the foregoing, the
final payment made under each Series G-1 Equipment Note and each Series C
Equipment Note shall be in an amount sufficient to discharge in full the unpaid
principal amount and all accrued and unpaid interest on, and any other amounts
due under, such Equipment Note. Each Equipment Note shall bear interest, payable
on demand, at the Past Due Rate (and not at the Debt Rate) (calculated on the
basis of a year of 360 days comprised of twelve 30-day months) on any principal
amount and (to the extent permitted by applicable law) Make-Whole Amount, if
any, interest and any other amounts payable thereunder not paid when due for any
period during which the same is overdue, in each case for the period the same is
overdue. Amounts shall be overdue under an Equipment Note if not paid in the
manner provided therein or in this Indenture when due (whether at stated
maturity, by acceleration or otherwise). Notwithstanding anything to the
contrary contained herein, if any date on which a payment hereunder or under any
Equipment Note becomes due and payable is not a Business Day, then such payment
shall not be made on such scheduled date but shall be made on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date, and if such payment is made on such next succeeding Business
Day, no interest shall accrue on the amount of such payment from and after such
scheduled date.
The Equipment Notes shall be executed on behalf of Owner Trustee 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 Owner Trustee shall bind Owner Trustee, 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 Owner Trustee 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. Owner Trustee
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 Owner Trustee
and Lessee), all amounts paid by Owner Trustee hereunder and under such
Noteholder's Equipment Note or Equipment Notes to such Noteholder or a nominee
therefor (including all amounts distributed pursuant to Article III) by
transferring, or causing to be transferred, by wire transfer of immediately
available funds in Dollars, prior to 12:00 noon (New York City time) on the due
date of payment, to an account maintained by such Noteholder with a bank located
in the continental United States the amount to be distributed to such
Noteholder, for credit to the account of such Noteholder maintained at such
bank; provided that, in the event the Equipment Notes are not held by
Subordination Agent on behalf of Pass Through Trustees, Loan Trustee may at its
option pay such amounts by check mailed to Noteholder's address as it appears on
the Equipment Note Register. If, after its receipt of funds at the place and
prior to the time specified above in the immediately preceding sentence, Loan
Trustee fails (other than as a result of a failure of Noteholder to provide it
with wire transfer instructions) to make any such payment required to be paid by
wire transfer as provided in the immediately preceding sentence on the Business
Day it receives such funds, Loan Trustee, in its individual capacity and not as
trustee, agrees to compensate such Noteholders for loss of use of funds at the
Federal Funds Rate until such payment is made and Loan Trustee shall be entitled
to any interest earned on such funds until such payment is made. Any payment
made hereunder shall be made without any presentment or surrender of any
Equipment Note, except that, in the case of the final payment in respect of any
Equipment Note, such Equipment Note shall be surrendered to Loan Trustee for
cancellation. Notwithstanding any other provision of this Indenture to the
contrary, Loan Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for Loan Trustee to do so in view of the time of day when the funds
to be so transferred were received by it if such funds were received after 1:00
p.m. (New York City time) at the place of payment.
Section 2.04 Withholding Taxes. Loan Trustee shall exclude and
withhold at the appropriate rate from each payment of principal amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Equipment Note (which exclusion and withholding shall constitute payment of
such amounts payable hereunder or in respect of such Equipment Notes, as
applicable) any and all withholding taxes applicable thereto as required by law.
Loan Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future taxes or similar charges are required
to be withheld with respect to any amounts payable hereunder or in respect of
the Equipment Notes, to withhold such amounts (which withholding shall
constitute payment of such amounts payable hereunder or in respect of such
Equipment Notes, as applicable) and timely pay the same to the appropriate
authority in the name of and on behalf of Noteholders, that it will file any
necessary withholding tax returns or statements when due, and that as promptly
as possible after the payment thereof it will deliver to each Noteholder (with a
copy to Owner Trustee and Lessee) 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.
Neither Owner Participant nor Owner Trustee shall be liable for the
failure of Loan Trustee to withhold taxes in the manner provided for herein.
Section 2.05 Application of Payments. Subject always to Section 2.13
and except as otherwise provided in Article III, in the case of each Equipment
Note, each payment of an installment of principal amount, Make-Whole Amount, if
any, and interest paid thereon shall be applied:
first, to the payment of accrued interest on such Equipment Note (as
well as any interest on any overdue principal amount and (to the extent
permitted by law) any overdue Make-Whole Amount, if any, any overdue
interest and any other overdue amounts thereunder) to the date of such
payment; and
second, to the payment of Make-Whole Amount, if any; and
third, to the payment of principal amount of such Equipment Note (or
portion thereof) then due thereunder.
Section 2.06 Termination of Interest in Indenture Estate. No
Noteholder or Indenture Indemnitee shall, as such, have any further interest in,
or other right with respect to, the Indenture Estate when and if the principal
amount of, Make-Whole Amount, if any, and interest (including interest on any
overdue amounts) on and all other amounts due under all Equipment Notes held by
such Noteholder and all other sums then payable to such Noteholder or Indenture
Indemnitee, as the case may be, hereunder and under the other Operative
Documents by Owner Trustee (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, Owner Trustee 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, Owner Trustee
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 Owner Trustee 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. Owner
Trustee 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. Owner
Trustee 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 Owner Trustee nor Loan
Trustee shall be affected by any notice to the contrary. Loan Trustee will
promptly notify Owner Trustee, Owner Participant and Lessee of each registration
of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by
its acceptance of an Equipment Note, agrees to the provisions of the Operative
Documents applicable to Noteholders, and shall be deemed to have represented,
warranted and covenanted to the parties to the Participation Agreement as to the
matters represented, warranted and covenanted by Noteholders, including Pass
Through Trustees, in the Participation Agreement. Subject to compliance by
Noteholder and any transferee of the requirements set forth in this Section 2.07
and in Section 2.09, Loan Trustee and Owner Trustee 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, Owner
Trustee 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 Owner
Trustee. If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to Owner Trustee, Owner
Participant and Loan Trustee such security or indemnity as may be required by
them to save Owner Trustee, Owner Participant and Loan Trustee harmless and
evidence satisfactory to Owner Trustee, Owner Participant 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 Lessee.
Section 2.10 Mandatory Redemption of Equipment Notes. (a) On the
date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to
make payment for an Event of Loss in respect of the Airframe or the Airframe and
the Engines installed thereon; all of the Equipment Notes shall be redeemed in
whole at a redemption price equal to 100% of the unpaid principal amount
thereof, together with all accrued interest thereon to (but excluding) the date
of redemption and all other amounts payable hereunder or under the Participation
Agreement to Noteholders, but without any Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by
Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have
assumed all of the obligations of Owner Trustee hereunder pursuant to Section
2.17 and to Section 6.01(k) of the Participation Agreement, on the date the
Lease is so terminated all of the Equipment Notes shall be redeemed in whole at
a redemption price equal to 100% of the unpaid principal amount thereof,
together with accrued interest thereon to (but excluding) the date of redemption
and all other amounts payable hereunder or under the Participation Agreement to
Noteholders plus Make-Whole Amount, if any.
Section 2.11 Voluntary Redemption of Equipment Notes. All, but not
less than all, of the Equipment Notes may be redeemed in whole by Owner Trustee
in connection with a transaction described in, and subject to the terms and
conditions of, Section 13.01 of the Participation Agreement upon at least 20
days' revocable prior written notice to Loan Trustee at a redemption price equal
to 100% of the unpaid principal amount of the Equipment Notes being redeemed,
together with accrued interest thereon to (but excluding) the date of redemption
and all other amounts payable hereunder or under the Participation Agreement to
Noteholders plus the Make-Whole Amount, if any.
Section 2.12 Redemptions; Notice of Redemptions; Repurchases. (a)
Neither any redemption of any Equipment Note nor any purchase by Owner Trustee
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, Owner Trustee 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 or purchase with respect to the Equipment
Notes shall be given by Loan Trustee by first-class mail, postage prepaid,
mailed not less than 15 nor more than 60 days prior to the applicable redemption
date, to each Noteholder at such Noteholder's address appearing in the Equipment
Note Register, provided that, in the case of a redemption to be made pursuant to
Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be
deemed revoked in the event that the Lease does not in fact terminate on the
specified termination date or if notice of such redemption shall have been given
in connection with a refinancing of the Equipment Notes and Loan Trustee
receives written notice of such revocation from Lessee or Owner Trustee not
later than three days prior to the redemption date. All notices of redemption
shall state: (1) the redemption date, (2) the applicable basis for determining
the redemption price, (3) that on the redemption date, the redemption price will
become due and payable upon each such 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, Owner Trustee (or any Person
on behalf of Owner Trustee) shall, to the extent an amount equal to the
redemption price for the Equipment Notes to be redeemed or purchased on the
redemption date shall not then be held in the Indenture Estate, 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 or purchased.
(d) Notice of redemption having been given as aforesaid (and not
revoked or deemed revoked as contemplated in the proviso in the first sentence
of Section 2.12(b)), the Equipment Notes to be redeemed or purchased shall, on
the redemption date, become due and payable at the Corporate Trust Office of
Loan Trustee, and from and after such redemption date (unless there is a default
in the deposit of the redemption price pursuant to Section 2.12(c)) any such
Equipment Notes then outstanding shall cease to bear interest. Upon surrender of
any such Equipment Note for redemption in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price.
Section 2.13 Subordination. (a) The indebtedness evidenced by the
Series G-1 Equipment Notes and Series G-2 Equipment Notes shall rank in right of
payment equally with all other Series G-1 Equipment Notes and Series G-2
Equipment Notes. The indebtedness evidenced by the Series C Equipment Notes is,
to the extent and in the manner provided in this Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations in respect of the Series G-1 Equipment Notes and Series G-2
Equipment Notes, and the Series C Equipment Notes are issued subject to such
provisions. By acceptance of its Equipment Notes of any Series, each Noteholder
of such Series (i) agrees to and shall be bound by such provisions, (ii)
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 (iii) appoints Loan Trustee as such Noteholder's
attorney-in-fact for such purpose.
(b) Owner Trustee, 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 commencement of any
proceedings of the type referred to in Section 4.02(g), 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. Owner Trustee agrees to pay to Loan
Trustee for distribution in accordance with Section 3.04:
(a) any and all indemnity amounts received by Owner Trustee which
are payable by Lessee to (i) Loan Trustee in its individual capacity, (ii)
Noteholders, (iii) Subordination Agent, (iv) Liquidity Provider, (v) Policy
Provider, or (vi) Pass Through Trustees, in each case pursuant to Section 4.02
or 4.03 of the Participation Agreement;
(b) an amount or amounts equal to the fees payable to Liquidity
Provider under Section 2.03 of each Liquidity Facility and the related Fee
Letter (as defined in the Intercreditor Agreement), multiplied by a fraction,
the numerator of which is the sum of the then outstanding aggregate principal
amount of the Series G-1 Equipment Notes, Series G-2 Equipment Notes and Series
C Equipment Notes and the denominator of which is the sum of the then
outstanding aggregate principal amount of all "Series G-1 Equipment Notes",
"Series G-2 Equipment Notes" and "Series C Equipment Notes" (in each case as
defined in the Intercreditor Agreement);
(c) if any payment default shall have occurred and be continuing
with respect to interest on any Series G-1 Equipment Note, Series G-2 Equipment
Note or Series C Equipment Note, (x) the excess, if any, of (1) the amount equal
to the sum of interest on any Unpaid Advance or Applied Provider Advance payable
under Section 3.07 of each Liquidity Facility plus any other amounts payable in
respect of such Unpaid Advance or Applied Provider Advance under Section 3.01,
3.03 or 3.09 of the Liquidity Facility under which such Unpaid Advance or
Applied Provider Advance was made over (2) the sum of Investment Earnings from
any Final Advance plus any amount of interest at the Past Due Rate actually
payable (whether or not in fact paid) by Owner Trustee in respect of the overdue
scheduled interest on the Equipment Notes, multiplied by (y) a fraction, the
numerator of which is the then aggregate overdue amounts of interest on the
Series G-1 Equipment Notes, Series G-2 Equipment Notes and Series C Equipment
Notes (other than interest becoming due and payable solely as a result of
acceleration of any such Equipment Notes) and the denominator of which is the
then aggregate overdue amounts of interest on all "Series G-1 Equipment Notes",
"Series G- 2 Equipment Notes" and "Series C Equipment Notes" (in each case as
defined in the Intercreditor Agreement) (other than interest becoming due and
payable solely as a result of acceleration of any such "Equipment Notes");
(d) any amounts owed to Liquidity Provider by Subordination Agent as
borrower under Section 3.01 (other than in respect of an Unpaid Advance or
Applied Provider Advance), 3.03 (other than in respect of an Unpaid Advance or
Applied Provider Advance), 7.05 and 7.07 of each Liquidity Facility multiplied
by the fraction specified in the foregoing clause (b);
(e) 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 (b) (but in any
event without duplication of any amount or amounts payable by Owner Trustee in
respect of such compensation under any other Operative Document or Pass Through
Document);
(f) an amount or amounts equal to all compensation and reimbursement
of fees, expenses and disbursements (including payment of indemnities) owed to
Policy Provider under the Policy Provider Agreement, multiplied by the fraction
specified in the foregoing clause (b); and
(g) any and all amounts received by Owner Trustee which are payable
by Lessee under clause (c) of the definition of Supplemental Rent.
For purposes of this paragraph, the terms "Applied Provider
Advance", "Cash Collateral Account", "Final Advance", "Investment Earnings",
"Replacement Liquidity Facility" and "Unpaid Advance" have the meanings
specified in each Liquidity Facility or the Intercreditor Agreement.
Section 2.15 Repayment of Monies for Equipment Note Payments Held by
Loan Trustee. Any money held by Loan Trustee in trust for any payment of the
principal of, Make-Whole Amount, if any, or interest or any other amounts due
on, any Equipment Note, including, without limitation, any money deposited
pursuant to Section 2.12(c), and remaining unclaimed for two years after the due
date for such payment (or such lesser time as Loan Trustee is satisfied, after
60 days' notice from Owner Trustee, is one month prior to the escheat period
provided under applicable state law) shall be paid to Owner Trustee. Noteholders
of any outstanding Equipment Notes shall thereafter, as unsecured general
creditors, look only to Owner Trustee 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
Owner Trustee 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 Owner Trustee as provided herein.
Section 2.16 Directions by Subordination Agent. So long as
Subordination Agent is a Noteholder, notwithstanding anything contained herein
or in any other Operative Document to the contrary, in exercising its right to
vote the Equipment Notes held by it, or in giving or taking any direction,
consent, request, demand, instruction, authorization, notice, waiver or other
action provided by this Indenture or in respect of the Equipment Notes to be
given or taken by a Noteholder (each such vote or other action, a "Direction")
in respect of such Equipment Notes, Subordination Agent may act in accordance
with any votes, directions, consents, requests, demands, instructions,
authorizations, notices, waivers or other actions given or taken by any
applicable Pass Through Trustee or the Controlling Party pursuant to the
Intercreditor Agreement, including without limitation pursuant to Section 2.06,
Article IV or Section 8.01(b) thereof. Subordination Agent shall be permitted
(x) to give a Direction with respect to less than the entire principal amount of
any single Equipment Note held by it, and (y) to give different Directions with
respect to different portions of the principal amount of any single Equipment
Note held by it. Any Direction given by Subordination Agent at any time with
respect to more than a majority in aggregate unpaid principal amount of all of
the Equipment Notes issued and then outstanding hereunder shall be deemed to
have been given by a Majority in Interest of Noteholders.
Section 2.17 Assumption of Equipment Notes by Lessee. If, in
accordance with the provisions of Section 6.01(k) of the Participation
Agreement, Lessee shall be entitled to assume (on a full recourse basis) all of
the obligations of Owner Trustee hereunder and under the Equipment Notes by a
supplemental indenture satisfactory to Loan Trustee (which shall contain (i) the
provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease
and (ii) other provisions necessary or advisable to effectuate such assumption),
then upon delivery of such supplemental indenture, payment by Lessee of all
expenses (including reasonable fees and expenses of counsel) for Owner Trustee
and Owner Participant and delivery of an opinion of counsel for Lessee that such
assumption has been duly and validly effected, Owner Trustee shall be released
and discharged from any further obligations hereunder and under the Equipment
Notes and all other Operative Documents, except with respect to such obligations
that accrued prior thereto and Owner Participant shall be released and
discharged from any further obligations under the Participation Agreement and
any other Operative Document to which it is a party, except with respect to such
obligations that accrued prior thereto.
Section 2.18 Payments from Indenture Estate Only.
(a) Without impairing any of the other rights, powers, remedies,
privileges, liens or security interests of Noteholders under this Indenture,
each Noteholder, by its acceptance of an Equipment Note, agrees that as between
it and Owner Trustee, except as expressly provided in this Indenture, the
Participation Agreement or any other Operative Document, (i) the obligation to
make all payments of the principal amount of, interest on, Make-Whole Amount, if
any, and all other amounts due with respect to the Equipment Notes, and the
performance by Owner Trustee of every obligation or covenant contained in this
Indenture and in the Participation Agreement or any of the other Operative
Documents, shall be payable only from the income and proceeds from the Trust
Estate to the extent included in the Indenture Estate and only to the extent
that Owner Trustee shall have sufficient income or proceeds from the Trust
Estate to the extent included in the Indenture Estate to enable Loan Trustee to
make such payments in accordance with the terms of Article III hereof, and all
of the statements, representations, covenants and agreements made by Owner
Trustee (when made in such capacity) contained in this Indenture and any
agreement referred to herein other than the Trust Agreement, unless expressly
otherwise stated, are made and intended only for the purpose of binding the
Trust Estate (to the extent included in the Indenture Estate) and establishing
the existence of rights and remedies which can be exercised and enforced against
the Trust Estate (to the extent included in the Indenture Estate); therefore,
anything contained in this Indenture or such other agreements to the contrary
notwithstanding (except for any express provisions or representations that Owner
Trustee is responsible for, or is making, in its individual capacity, for which
there would be personal liability of Owner Trustee), no recourse shall be had
with respect to this Indenture or such other agreements against Owner Trustee in
its individual capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of Owner Trustee, in its individual capacity, Owner Participant, Loan
Trustee and any officer, director, trustee, servant, employee, agent or direct
or indirect parent or controlling Person or Persons of any of them shall have
any personal liability for any amounts payable, or other obligation owed,
hereunder, under the Participation Agreement or any of the other Operative
Documents or under the Equipment Notes except as expressly provided herein or in
the Participation Agreement; provided, however, that nothing contained in this
Section 2.18(a) shall be construed to limit the exercise and enforcement in
accordance with the terms of this Indenture or such other agreements of rights
and remedies against the Trust Estate, to the extent included in the Indenture
Estate. These provisions are not intended as any release or discharge of the
indebtedness represented by the Equipment Notes and the Indenture, but are
intended only as a covenant not to sue Owner Participant, Owner Trustee or Loan
Trustee in their individual capacities, except as expressly provided herein or
in the Participation Agreement, for a deficiency with respect to such
indebtedness, the indebtedness represented by this Indenture and the Equipment
Notes to remain in full force and effect as fully as though these provisions
were not contained in this Indenture. Owner Trustee hereby acknowledges that
Noteholders have expressly reserved all their rights and remedies against the
Indenture Estate, including the right, in the event of a default in the payment
of all or part of the principal amount of, interest on, Make-Whole Amount, if
any, or any other amount due with respect to any Equipment Note within the
periods provided for in Section 4.02 hereof, or upon the occurrence and
continuation of any other Indenture Event of Default, to foreclose upon this
Indenture, and/or to receive the proceeds from the Indenture Estate and
otherwise to enforce any other right under this Indenture in accordance with the
provisions hereof. Nothing in this Section 2.18(a) shall (x) release Owner
Trustee or constitute a covenant not to sue Owner Trustee for any breach by it
of any representations, warranties or covenants of Owner Trustee contained in
the Operative Documents or (y) release Owner Trustee in its individual capacity
from personal liability, or constitute a covenant not to sue Owner Trustee in
its individual capacity for any breach by it of any representations, warranties
or covenants of Owner Trustee made in its individual capacity in the Operative
Documents.
(b) If (i) all or any part of the Trust Estate becomes the property
of, or Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code,
Owner Trustee (in its individual capacity) or Owner Participant is required, by
reason of Owner Trustee (in its individual capacity) or Owner Participant being
held to have recourse liability to any Noteholder or Loan Trustee, directly or
indirectly (other than the recourse liability of Owner Trustee (in its
individual capacity), to make payment on account of any amount payable as
principal, Make-Whole Amount, if any, interest or other amounts on the Equipment
Notes or under this Indenture and (iii) any Noteholder or Loan Trustee actually
receives any Excess Amount (as hereinafter defined) which reflects any payment
by Owner Trustee (in its individual capacity) or Owner Participant on account of
clause (ii) above, then such Noteholder or Loan Trustee, as the case may be,
shall promptly refund to Owner Trustee (in its individual capacity) or Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.18(b), "Excess Amount" means the
amount by which such payment exceeds the amount that would have been received by
a Noteholder or Loan Trustee if Owner Trustee (in its individual capacity) or
Owner Participant had not become subject to the recourse liability referred to
in clause (ii) above. Nothing contained in this Section 2.18(b) shall prevent a
Noteholder or Loan Trustee from enforcing any personal recourse obligation (and
retaining the proceeds thereof) of Owner Trustee (in its individual capacity) or
Owner Participant under the Participation Agreement or this Indenture (and any
exhibits or annexes hereto or thereto) or by separate agreement or from
retaining any amount paid by Owner Participant under Section 2.19 or 4.03
hereof.
Section 2.19 Option to Purchase Equipment Notes.
Either Owner Trustee or Owner Participant may, upon the events and
subject to the terms and conditions and for the price set forth in this Section
2.19, purchase all but not less than all of the Equipment Notes outstanding
hereunder, and each Noteholder agrees that it will, upon such events and subject
to such terms and conditions and upon receipt of such price, sell, assign,
transfer and convey to such purchaser or its nominee (without recourse or
warranty of any kind except as to its title to the Equipment Notes and except
against Liens on such Equipment Notes arising by, through or under such holder),
all of the right, title and interest of such Noteholder in and to the Indenture
Estate, this Indenture and the Equipment Notes held by it, and such purchaser or
its nominee shall assume all of such holder's obligations arising subsequent to
such sale under the Participation Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised by
Owner Trustee or Owner Participant upon any of the following events, and, in any
such event, the purchase price thereof shall equal for each Equipment Note the
aggregate unpaid principal amount thereof, plus accrued and unpaid interest
thereon to the date of purchase and all other amounts (other than the Make-Whole
Amount, except as provided in the next sentence) then payable hereunder or under
the Participation Agreement to the holder thereof. Such option to purchase the
Equipment Notes may be exercised: (i) upon a Loan Trustee Event or (ii) in the
event there shall have occurred and be continuing a Lease Event of Default,
provided that if such option is exercised pursuant to this clause (ii) at a time
when there shall have occurred and be continuing for less than 180 days a Lease
Event of Default, the purchase price thereof shall equal the price provided in
the preceding sentence plus the Make-Whole Amount, if any.
Such option to purchase the Equipment Notes may be exercised by
Owner Trustee or Owner Participant giving written notice of its election of such
option to Loan Trustee, which notice shall specify a date for such purchase not
more than thirty (30) days or less than fifteen (15) days after the date of such
notice. Loan Trustee shall not exercise any of the remedies hereunder or,
without the consent of Owner Trustee or Owner Participant, under the Lease,
during the period from the time that a notice of exercise by Owner Participant
of such option to purchase becomes irrevocable until the date on which such
purchase is required to occur pursuant to the terms of the preceding sentence.
Such election to purchase the Equipment Notes shall become irrevocable upon the
sixteenth day preceding the date specified in the written notice described in
the first sentence of this paragraph.
If Owner Trustee or Owner Participant on or before the date of such
purchase shall so request, Noteholders will comply with all the provisions of
Section 2.07 to enable new Equipment Notes to be issued to Owner Trustee or
Owner Participant or its nominee in such denominations as Owner Trustee or Owner
Participant shall request. All taxes, charges and expenses required pursuant to
Section 2.09 in connection with the issuance of such new Equipment Note shall be
borne by Owner Participant.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM
THE INDENTURE ESTATE
Section 3.01 Basic Rent Distributions. Except as otherwise provided
in Section 3.03, each installment of Basic Rent, any payment of interest on
overdue installments of Basic Rent and any payment received by Loan Trustee
pursuant to Section 4.03 shall be promptly distributed in the following order of
priority:
first, (i) so much of such installment or payment as is required
to pay in full the aggregate amount of the payment or payments of
principal amount and interest (as well as any interest on any
overdue principal amount and, to the extent permitted by
applicable law, on any overdue interest and any other overdue
amounts) then due under all Series G-1 Equipment Notes and Series
G-2 Equipment Notes shall be distributed to Noteholders of Series
G-1 Equipment Notes and Series G-2 Equipment Notes ratably,
without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series
G-1 Equipment Note or Series G-2 Equipment Note bears to the
aggregate amount of the payments then due under all Series G-1
Equipment Notes and Series G-2 Equipment Notes; and
(ii) after giving effect to paragraph (i) above, so much of
such installment or payment remaining as is required to pay in full
the aggregate amount of the payment or payments of principal amount
and interest (as well as any interest on any overdue principal
amount and, to the extent permitted by applicable law, on any
overdue interest and other overdue amounts) then due under all
Series C Equipment Notes shall be distributed to Noteholders of
Series C Equipment Notes ratably, without priority of one over the
other, in the proportion that the amount of such payment or payments
then due under each Series C Equipment Note bears to the aggregate
amount of the payments then due under all Series C Equipment Notes;
and
second, the balance, if any, of such installment remaining thereafter
shall be distributed to Owner Trustee, provided, however that if
an Indenture Event of Default shall have occurred and be
continuing, then such balance shall not be distributed as
provided in this clause "Second" but shall be held by Loan
Trustee as part of the Indenture Estate and invested in
accordance with Section 5.09 until whichever of the following
shall first occur: (i) all Indenture Events of Default shall have
been cured or waived, in which event the balance shall be
distributed as provided in this clause "Second" without reference
to this proviso, (ii) Section 3.03 shall be applicable, in which
event such balance shall be distributed in accordance with the
provisions of Section 3.03 or (iii) the 120th day after the
receipt of such payment in which case such payment shall be
distributed as provided in this clause "Second" without reference
to this proviso.
Section 3.02 Event of Loss; Voluntary Termination; Refinancing.
Except as otherwise provided in Section 3.03, any payments received by Loan
Trustee (a) with respect to the Aircraft as the result of an Event of Loss, (b)
pursuant to a voluntary termination of the Lease pursuant to Section 9 or 19(d)
thereof or (c) in connection with a refinancing of the Equipment Notes pursuant
to Section 13.01 of the Participation Agreement shall be applied to redemption
of the Equipment Notes pursuant to Section 2.10 or Section 2.11, as applicable,
and to payment of all other Secured Obligations by applying such funds in the
following order of priority:
first, (i) to reimburse Loan Trustee and Noteholders for any
reasonable costs or expenses actually incurred in connection with such
redemption for which they are entitled to reimbursement, or indemnity by
Lessee, under the Operative Documents; and then (ii) to pay any other
amounts then due (except as provided in clause "second" below) to Loan
Trustee, Noteholders and Indenture Indemnitees under this Indenture, the
Participation Agreement or the Equipment Notes;
second, (i) to pay the amounts specified in subclause (i) of clause
"third" of Section 3.03 plus Make-Whole Amount, if any, then due and
payable in respect of the Series G-1 Equipment Notes and the Series G-2
Equipment Notes; and (ii) after giving effect to subclause (i) above, to
pay the amounts specified in subclause (ii) of clause "third" of Section
3.03 plus Make-Whole Amount, if any, then due and payable in respect of
the Series C Equipment Notes; and
third, the balance, if any, of such payments shall be distributed to
Owner Trustee.
Notwithstanding the foregoing, if a Replacement Airframe or Replacement Engine
shall be substituted for the Airframe or an Engine subject to such Event of Loss
as provided in Section 10 of the Lease and Section 5.06, any insurance,
condemnation or similar proceeds resulting from such Event of Loss that are
received by Loan Trustee shall be held by Loan Trustee as permitted by Section
6.04 (provided that such money shall be invested as provided in Section 5.09) as
additional security for the obligations of Lessee under the Operative Documents
to which it is a party and, unless otherwise applied pursuant to the Lease, such
money (and any investment earnings) shall be released to Lessee at Lessee's
written request upon the release of a damaged Airframe or Engine and the
replacement thereof as provided in the Lease.
No Make-Whole Amount shall be payable on the Equipment Notes in
connection with their redemption as a result of an Event of Loss in respect of
the Airframe or the Airframe and the Engines installed thereon.
Section 3.03 Payments after Indenture 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 Section 15 of the Lease or Article IV
hereof) after both an Indenture Event of Default shall have occurred and be
continuing and the Equipment Notes shall have become due and payable pursuant to
Section 4.04(b) or Section 4.04(d), as well as all payments or amounts then held
by Loan Trustee as part of the Indenture Estate, shall be promptly distributed
by Loan Trustee in the following order of priority:
first, so much of such payments or amounts as is required to (i)
reimburse Loan Trustee, to the extent Loan Trustee is entitled to be
reimbursed or indemnified under the Operative Documents, for any Tax,
expense or other loss (including, without limitation, all amounts to be
expended at the expense of, or charged upon the tolls, rents, revenues,
issues, products and profits of, the Indenture Estate and every part
thereof (all such property being herein called the "Mortgaged Property")
pursuant to Section 4.05(b)) 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 Indenture Event of
Default shall be applied by Loan Trustee as between itself and Noteholders
in reimbursement of such expenses and any other expenses for which Loan
Trustee or Noteholders are entitled to reimbursement under any Operative
Document, and (ii) to pay all amounts payable (except as provided in
clauses "second" and "third" below) to the other Indenture Indemnitees
hereunder and under the Participation Agreement; and in case the aggregate
amount so to be distributed is insufficient to pay as aforesaid, then
ratably, without priority of one over the other, in proportion to the
amounts owed each hereunder;
second, so much of such payments or amounts remaining as is required
to reimburse the then existing or prior Noteholders for payments made
pursuant to Section 5.03 (to the extent not previously reimbursed) shall
be distributed to such then existing or prior Noteholders ratably, without
priority of one over the other, in accordance with the amount of the
payment or payments made by each such then existing or prior Noteholder
pursuant to Section 5.03;
third, (i) so much of such payments or amounts remaining as is
required to pay in full the aggregate unpaid principal amount of all
Series G-1 Equipment Notes and Series G-2 Equipment Notes and the accrued
but unpaid interest and all other Secured Obligations in respect of the
Series G-1 Equipment Notes and Series G-2 Equipment Notes to the date of
distribution shall be distributed to Noteholders of Series G-1 Equipment
Notes and Series G-2 Equipment Notes ratably, without priority of one over
the other, in the proportion that the aggregate unpaid principal amount of
all Series G-1 Equipment Notes and Series G-2 Equipment Notes held by each
Noteholder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder to the date of distribution bears to the aggregate
unpaid principal amount of all Series G-1 Equipment Notes and Series G-2
Equipment Notes held by all such Noteholders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution; and
(ii) after giving effect to subclause (i) above, so much of such payments
or amounts remaining as is required to pay in full the aggregate unpaid
principal amount of all Series C Equipment Notes and the accrued but
unpaid interest and all other Secured Obligations in respect of the Series
C Equipment Notes to the date of distribution shall be distributed to
Noteholders of Series C Equipment Notes ratably, without priority of one
over the other, in the proportion that the aggregate unpaid principal
amount of all Series C Equipment Notes held by each Noteholder plus the
accrued but unpaid interest and other amounts due hereunder or thereunder
to the date of distribution bears to the aggregate unpaid principal amount
of all Series C Equipment Notes held by all such Noteholders plus the
accrued but unpaid interest and other amounts due thereon to the date of
distribution; and
fourth, the balance, if any, of such payments or amounts shall be
distributed to Owner Trustee.
No Make-Whole Amount shall be payable on the Equipment Notes as a
consequence of or in connection with 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 Owner Trustee or Lessee pursuant to any of the
provisions of this Indenture other than those set forth in this Article III
(including Section 5.09 hereof) shall be so paid to Owner Trustee or Lessee, as
applicable. 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 Owner Trustee or Lessee whether pursuant to Section
4.02 or Section 4.03 of the Participation Agreement or as Supplemental Rent in
respect of (i) State Street and Loan Trustee, (ii) Subordination Agent, (iii)
Pass Through Trustees, (iv) Liquidity Provider and (v) Policy Provider, in each
case, directly to the Person entitled thereto. Any payment received by Loan
Trustee from Owner Trustee under clauses (b) through (f) of Section 2.14 shall
be distributed to Subordination Agent to be distributed pursuant to Section
2.03(c) of the Intercreditor Agreement.
(c) Notwithstanding anything to the contrary contained in this
Article III, any amounts received by Loan Trustee which constitute Excluded
Payments shall be distributed promptly upon receipt by Loan Trustee directly to
the Person or Persons entitled thereto.
(d) Notwithstanding any provision of this Indenture to the contrary,
any amounts held by Loan Trustee that would, but for the provisions of Section
3.03, otherwise be distributed to Lessee shall, notwithstanding the provisions
of said Section, be distributed to Lessee unless and until a Lease Event of
Default shall have occurred and be continuing.
Section 3.05 Other Payments. Any payments received by Loan Trustee
for which no provision as to the application thereof is made in any Operative
Document shall be distributed by Loan Trustee to the extent received or realized
at any time (i) prior to the payment in full of all Secured Obligations due
Noteholders, in the order of priority specified in Section 3.01 subject to the
proviso thereto, and (ii) after payment in full of all Secured Obligations due
Noteholders, in the following order of priority:
first, to the extent payments or amounts described in clause "first" of
Section 3.03 are otherwise obligations of Lessee under the Operative
Documents or for which Lessee is obligated to indemnify against
thereunder, in the manner provided in clause "first" of Section
3.03, and
second, in the manner provided in clause "fourth" of Section 3.03.
Further, and except as otherwise provided in Sections 3.02, 3.03 and
3.04, all payments received and amounts realized by Loan Trustee
under the Lease or otherwise with respect to the Aircraft
(including, without limitation, all amounts realized upon the sale
or re-lease of the Aircraft after the termination of the Lease with
respect thereto), to the extent received or realized at any time
after payment in full of all Secured Obligations due Noteholders,
shall be distributed by Loan Trustee in the order of priority
specified in clause (ii) of the immediately preceding sentence of
this Section 3.05.
Section 3.06 Payments to Owner Trustee. Any amounts distributed
hereunder by Loan Trustee to Owner Trustee shall be paid to Owner Trustee
(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 Owner
Trustee to Loan Trustee from time to time. Owner Trustee hereby notifies Loan
Trustee that unless and until Loan Trustee receives notice to the contrary from
Owner Trustee, all amounts to be distributed to Owner Trustee pursuant to clause
"second" of Section 3.01 shall be distributed by wire transfer of funds of the
type received by Loan Trustee to Owner Participant's account (within the time
limits contemplated by Section 2.03) specified in Section 16.12 of the
Participation Agreement.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; INDENTURE EVENTS OF DEFAULT; REMEDIES OF LOAN
TRUSTEE
Section 4.01 Covenants of Owner Trustee.
Owner Trustee hereby covenants and agrees (the covenants and
agreements only in clause (b) below being made by Owner Trustee in its
individual capacity) as follows:
(a) Owner Trustee will duly and punctually pay the principal
amount of, Make-Whole Amount, if any, and interest on and other
amounts due under the Equipment Notes and hereunder in accordance
with the terms of the Equipment Notes and this Indenture and all
amounts, if any, payable by it to Noteholders under the
Participation Agreement;
(b) Owner Trustee in its individual capacity covenants and
agrees that it shall not, directly or indirectly, cause or permit to
exist a Lessor Lien attributable to it in its individual capacity
with respect to the Aircraft or any other portion of the Trust
Estate; that it will promptly, at its own expense, take such action
as may be necessary to duly discharge such Lessor Lien attributable
to it in its individual capacity; and that it will make restitution
to the Trust Estate for any actual diminution of the assets of the
Trust Estate resulting from such Lessor Liens attributable to it in
its individual capacity;
(c) in the event Owner Trustee shall have Actual Knowledge of
an Indenture Event of Default, an Indenture Default or an Event of
Loss, Owner Trustee will give prompt written notice of such
Indenture Event of Default, Indenture Default or Event of Loss to
Loan Trustee, each Noteholder, Lessee and Owner Participant;
(d) Owner Trustee will furnish to Loan Trustee, promptly upon
receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates and other instruments furnished to
Owner Trustee under the Lease, including, without limitation, a copy
of any Termination Notice and a copy of each report or notice
received pursuant to Section 9(a) and 11(c) of the Lease to the
extent that the same shall not have been furnished to Loan Trustee
pursuant to the Lease;
(e) except pursuant to the Operative Documents or with the
consent of Loan Trustee (acting pursuant to instructions given in
accordance with Section 9.01 hereof), Owner Trustee will not
contract for, create, incur, assume or suffer to exist any Debt, and
will not guarantee (directly or indirectly or by an instrument
having the effect of assuring another's payment or performance on
any obligation or capability of so doing, or otherwise), endorse or
otherwise be or become contingently liable, directly or indirectly,
in connection with the Debt of any other person; and
(f) Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Participation Agreement,
the Trust Agreement and the other Operative Documents.
Section 4.02 Indenture Events of Default. Each of the following
events constitutes an "Indenture 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:
(a) any Lease Event of Default;
(b) Owner Trustee fails to make any payment of principal amount of,
Make-Whole Amount, if any, interest on or other amount due and payable under any
Equipment Note or hereunder (other than any such failure arising by virtue of a
tax withheld pursuant to Section 2.04 or as a result of a Lease Default or a
Lease Event of Default) and such failure continues unremedied for 15 days in the
case of any payment of principal amount, Make-Whole Amount, if any, or interest,
and in the case of any other amount, such failure continues unremedied for 15
days after the receipt by Owner Trustee or Owner Participant of written notice
thereof from Loan Trustee or any Noteholder;
(c) any Lien required to be discharged by Owner Trustee, in its
individual capacity pursuant to Section 4.01(b) or in its individual or trust
capacity pursuant to Section 6.01(g) of the Participation Agreement, or by Owner
Participant pursuant to Section 6.01(g) of the Participation Agreement shall
remain undischarged for a period of 30 days after Owner Trustee and Owner
Participant have received written notice from Loan Trustee or any Noteholder of
such Lien;
(d) any representation or warranty made by Owner Trustee or Owner
Participant in any Operative Document was incorrect in any material respect at
the time made, and such incorrectness continues to be material and adverse to
the interests of Loan Trustee or Noteholders; and if such misrepresentation is
capable of being corrected and if such correction is being sought diligently,
such misrepresentation shall not have been corrected within 60 days (or, without
affecting Section 4.02(f), in the case of the representations made in Sections
5.03(l) and 5.02(g) of the Participation Agreement as to the citizenship of
Owner Trustee in its individual capacity or Owner Participant, respectively, as
soon as is reasonably practicable but in any event within 60 days) following
notice thereof from Loan Trustee or any Noteholder to Owner Trustee or Owner
Participant, as the case may be;
(e) other than as provided in (c) above or (f) below), any failure
by Owner Trustee or Owner Participant to observe or perform any other covenant
or obligation of Owner Trustee or Owner Participant, as the case may be, for the
benefit of Loan Trustee or Noteholders contained in the Participation Agreement,
Section 4.01(a) of the Trust Agreement, the Equipment Notes or this Indenture
which is not remedied within a period of 60 days after notice thereof has been
given to Owner Trustee and Owner Participant;
(f) if at any time when the Aircraft is registered under the laws of
the United States, Owner Participant shall not be a Citizen of the United
States, and as the result thereof the registration of the Aircraft under the
Federal Aviation Act, and regulations then applicable thereunder, shall cease to
be effective; provided that no Indenture Event of Default shall be deemed to
have occurred under this paragraph (f) unless such circumstances continue
unremedied for more than 60 days after Owner Participant has Actual Knowledge of
the state of facts that resulted in such ineffectiveness and of such loss of
citizenship;
(g) at any time either (i) the commencement of an involuntary case
or other proceeding in respect of Owner Participant, Owner Trustee or the Trust
Estate in an involuntary case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law in the United States or seeking the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official of Owner Participant, Owner Trustee or the Trust Estate or for
all or substantially all of its property, or seeking the winding-up or
liquidation of its affairs and the continuation of any such case or other
proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii)
the commencement by Owner Participant, Owner Trustee or the Trust Estate of a
voluntary case or proceeding under the federal bankruptcy laws, as now or
constituted or hereafter amended, or any other applicable federal or state
bankruptcy, insolvency or other similar law in the United States, or the consent
by Owner Participant, Owner Trustee or the Trust Estate to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Owner Participant, Owner Trustee or
the Trust Estate or for all or substantially all of its property, or the making
by Owner Participant, Owner Trustee or the Trust Estate of any assignment for
the benefit of creditors of Owner Participant or Owner Trustee or the Trust
Estate shall take any action to authorize any of the foregoing; provided,
however, that an event referred to in this Section 4.02(g) with respect to Owner
Participant shall not constitute an Indenture Event of Default if within 30 days
of the commencement of the case or proceeding a final non-appealable order,
judgment or decree shall be entered in such case or proceeding by a court or a
trustee, custodian, receiver or liquidator, to the effect that no part of the
Trust Estate (except for Owner Participant's beneficial interest therein) and no
right, title or interest under the Indenture Estate shall be included in, or be
subject to, any declaration or adjudication of, or proceedings with respect to,
the bankruptcy, insolvency or liquidation of Owner Participant referred to in
this Section 4.02(g).
Section 4.03 Certain Rights.
Loan Trustee shall give Noteholders, Owner Trustee and Owner
Participant prompt written notice of any Indenture Event of Default (regardless
of a cure thereof) of which Loan Trustee has Actual Knowledge and, if any such
Indenture Event of Default results from a Lease Event of Default, shall give
Noteholders, Owner Trustee and Owner Participant not less than 10 Business Days'
prior written notice of the date (the "Enforcement Date") on or after which Loan
Trustee may commence and consummate the exercise of any remedy or remedies
described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or
remedies pursuant to the provisions of Section 15 of the Lease. If an Indenture
Event of Default shall have occurred and be continuing, Owner Trustee shall have
the following rights hereunder, any of which may be exercised directly by Owner
Participant.
If as a result of the occurrence of an Indenture Event of Default in
respect of the nonpayment by Lessee of Basic Rent due under the Lease, Loan
Trustee shall have insufficient funds to make any payment of principal amount
and interest on any Equipment Note on the day it becomes due and payable, Owner
Trustee or Owner Participant may, but shall not be obligated to, pay Loan
Trustee prior to the Enforcement Date, in the manner provided in Section 2.03
hereof, for application in accordance with Section 3.01 hereof, an amount equal
to the portion of the principal amount and interest (including interest, if any,
on any overdue payments of such portion of principal amount and interest) then
due and payable on the Equipment Notes, and, unless Owner Trustee has cured
Indenture Events of Default in respect of payments of Basic Rent on each of the
three immediately preceding Basic Rent payment dates, or Owner Trustee has cured
six previous Indenture Events of Default in respect of payments of Basic Rent,
such payment by Owner Trustee shall, solely for purposes of this Indenture be
deemed to cure any Indenture Event of Default which would otherwise have arisen
on account of the nonpayment by Lessee of such installment of Basic Rent (but
not any other Indenture Default or Indenture Event of Default which shall have
occurred and be continuing).
If any Indenture Event of Default (other than in respect of the
nonpayment of Basic Rent by Lessee) which can be cured has occurred, Owner
Trustee or Owner Participant may, but shall not be obligated to, cure such
Indenture Event of Default by taking such action prior to the Enforcement Date
as is necessary to accomplish the observance or performance of the defaulted
covenant, condition or agreement.
Solely for the purpose of determining whether there exists an
Indenture Event of Default, (a) any payment by Owner Participant pursuant to,
and in compliance with, the second preceding paragraph of this Section 4.03
shall be deemed to remedy any default by Lessee in the payments of installments
of Basic Rent theretofore due and payable and to remedy any default by Owner
Trustee in the payment of any amount due and payable under the Equipment Notes
or hereunder (but the same shall not relieve Lessee of its duty to pay all Rent
and perform all of its obligations pursuant to the Lease), and (b) any
performance by Owner Trustee of any obligation of Lessee under the Lease
pursuant to, and in compliance with, the first preceding paragraph of this
Section 4.03 shall be deemed to remedy any Lease Event of Default to the same
extent that like performance by Lessee itself would have remedied such Lease
Event of Default (but the same shall not relieve Lessee of its duty to pay all
Rent and perform all of its obligations pursuant to the Lease). If, on the basis
specified in the preceding sentence, any Lease Event of Default shall have been
remedied, then any declaration pursuant to Section 15 of the Lease that the
Lease is in default, and any declaration pursuant to this Indenture that the
Equipment Notes are due and payable or that an Indenture Event of Default exists
based upon such Lease Event of Default, shall be deemed to be rescinded.
Except as hereinafter in this Section 4.03 provided, Owner Trustee
shall not, as a result of exercising the right to cure any such Indenture Event
of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of Owner Trustee against
Lessee or any other party for the repayment of such costs or expenses impair the
prior right and security interest of Loan Trustee in and to the Mortgaged
Property. Upon any payment by Owner Trustee or Owner Participant pursuant to the
second or third preceding paragraphs of this Section 4.03, Owner Trustee or
Owner Participant, as the case may be, shall be subrogated to the rights of Loan
Trustee and Noteholders in respect of the Basic Rent which was overdue at the
time of such payment and interest payable by Lessee on account of its being
overdue and any Supplemental Rent in respect of the reimbursement of amounts
paid by Owner Trustee pursuant to the second preceding paragraph (but in either
case shall have no rights as a secured party hereunder), and thereafter, Owner
Trustee or Owner Participant, as the case may be, shall be entitled to receive
such overdue Basic Rent or Supplemental Rent, as the case may be, and interest
thereon upon receipt thereof by Loan Trustee (and shall be entitled to bring an
action against Lessee to enforce such payment); provided, however, that (i) if
the unpaid principal amount and interest on the Equipment Notes shall have
become due and payable pursuant to Section 4.04 hereof, such subrogation shall,
until the principal amount of, interest on, Make-Whole Amount, if any, and all
other amounts due with respect to all Equipment Notes shall have been paid in
full, be subordinate to the rights of Loan Trustee and Noteholders in respect of
such payment of overdue Basic Rent, Supplemental Rent and such interest and (ii)
Owner Trustee shall not be entitled to seek to recover any such payment (or any
payment in lieu thereof) except pursuant to the foregoing right of subrogation
by demand or suit for damages.
Section 4.04 Remedies. (a) Subject to the provisions of Section
2.19, if an Indenture 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, subject to the second paragraph of this Section 4.04(a), on and
after the Enforcement Date if such Indenture Event of Default results from a
Lease Event of Default, exercise any or all of the rights and powers and pursue
any and all of the remedies pursuant to this Article IV and shall have and may
exercise all of the rights and remedies of a secured party under the Uniform
Commercial Code and, in the event such Indenture Event of Default is also a
Lease Event of Default, any and all of the remedies pursuant to Section 15 of
the Lease and may take possession of all or any part of the properties covered
or intended to be covered by the Lien created hereby or pursuant hereto and may
exclude Owner Participant, Owner Trustee and Lessee and all persons claiming
under any of them wholly or partly therefrom, provided that Loan Trustee shall
give Owner Trustee and Owner Participant 20 days' prior written notice of its
intention to sell the Aircraft; provided, further, that in the event Loan
Trustee shall have validly terminated the Lease (or, in the event of a
reorganization proceeding involving Lessee instituted under Chapter 11 of the
Bankruptcy Code, such Lease is rejected), Loan Trustee shall not, without the
consent of Owner Participant (which consent shall not be unreasonably withheld),
sell or lease, or otherwise afford the use of, the Aircraft or any portion
thereof to Lessee or any affiliate thereof. Unless an Indenture Event of Default
not resulting from or relating to a Lease Event of Default has occurred and is
continuing, Owner Participant may bid at any public sale and become the
purchaser. Without limiting any of the foregoing, it is understood and agreed
that Loan Trustee may exercise any right of sale of the Aircraft available to
it, even though it shall not have taken possession of the Aircraft and shall not
have possession thereof at the time of such sale.
Anything in this Indenture to the contrary notwithstanding, Loan
Trustee shall not be entitled to exercise any remedy hereunder as a result of an
Indenture Event of Default which arises solely by reason of one or more events
or circumstances which constitute a Lease Event of Default unless Loan Trustee
as security assignee of Owner Trustee shall have exercised or concurrently be
exercising one or more of the remedies provided for in Section 15 of the Lease
to terminate the Lease or take possession of and/or sell the Aircraft; provided,
however, that such requirement to exercise one or more of such remedies under
the Lease shall not apply in circumstances where Loan Trustee is, and has been,
for a continuous period in excess of 60 days or such other period as may be
specified in Section 1110 (such 60-day or other period being the "Section 1110
Period"), involuntarily stayed or prohibited by applicable law or court order
from exercising such remedies under the Lease (a "Continuous Stay Period");
provided further, however, that the requirement to exercise one or more of such
remedies under the Lease shall nonetheless be applicable during a Continuous
Stay Period subsequent to the expiration of the Section 1110 Period to the
extent that the continuation of such Continuous Stay Period subsequent to the
expiration of the Section 1110 Period (i) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(2)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(2)(A-B) of the Bankruptcy Code or (ii) is
an extension of the Section 1110 Period with the consent of Loan Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (iii) is the consequence
of Loan Trustee's own failure to give any requisite notice to any Person. In the
event that the applicability of Section 1110 to the Aircraft is being contested
by Lessee in judicial proceedings, both Loan Trustee and Owner Trustee (without
affecting in any way any right or remedy of Loan Trustee hereunder) shall have
the right to participate in such proceedings.
It is expressly understood and agreed that, subject only to the
immediately preceding paragraph, the inability, described in such paragraphs, of
Loan Trustee to exercise any right or remedy under the Lease shall in no event
and under no circumstances prevent Loan Trustee from exercising any or all of
its rights, powers and remedies under this Indenture, including, without
limitation, this Article IV.
(b) If an Indenture Event of Default shall have occurred and be
continuing, then and in every such case Loan Trustee may, and upon the written
instructions of a Majority in Interest of Noteholders, Loan Trustee shall,
subject to Section 4.03, at any time, declare by written notice to Owner Trustee
and Owner Participant all the Equipment Notes to be due and payable, whereupon
the aggregate unpaid principal amount of all Equipment Notes then outstanding,
together with accrued but unpaid interest thereon and other amounts due
thereunder (but without Make-Whole Amount), shall immediately become due and
payable without presentment, demand, protest or notice, all of which are hereby
waived.
This Section 4.04(b), however, is subject to the condition that, if
at any time after the principal amount of the Equipment Notes shall have become
so due and payable, and before any judgment or decree for the payment of the
money so due, or any thereof, shall be entered, all overdue payments of interest
upon the Equipment Notes and all other amounts payable under the Equipment Notes
(except the principal amount of the Equipment Notes which by such declaration
shall have become payable) shall have been duly paid, and every other Indenture
Default and Indenture Event of Default with respect to any covenant or provision
of this Indenture shall have been cured, then and in every such case a Majority
in Interest of Noteholders may (but shall not be obligated to), by written
instrument filed with Indenture Trustee, rescind and annul Loan Trustee's
declaration and its consequences; but no such rescission or annulment shall
extend to or affect any subsequent Indenture Default or Indenture Event of
Default or impair any right consequent thereon.
(c) Any Noteholder or Noteholders shall be entitled to bid for and
become the purchaser of any part of the Indenture Estate offered for sale
pursuant to this Section 4.04 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 4.04(c) were not given effect).
(d) In the event of any sale of the Indenture Estate, or any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Indenture, the
unpaid principal amount of all Equipment Notes then outstanding, together with
accrued interest thereon, and other amounts due thereunder, shall immediately
become due and payable without presentment, demand, protest or notice, all of
which are hereby waived.
(e) Notwithstanding anything contained herein, so long as 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 part of the Indenture Estate or take any action with
respect to any part of the Indenture Estate 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 4.05 Return of Aircraft.
(a) If an Indenture Event of Default shall have occurred and be
continuing, subject to Sections 4.03 and 4.04 hereof, at the request of Loan
Trustee, Owner Trustee shall promptly execute and deliver to Loan Trustee such
instruments of title and other documents as Loan Trustee may deem 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 may
specify, to obtain possession of all or any part of the Mortgaged Property
included in the Indenture Estate to which Loan Trustee shall at the time be
entitled hereunder. If Owner Trustee shall for any reason fail to execute and
deliver such instruments and documents after such request by Loan Trustee, Loan
Trustee may (i) obtain a judgment conferring on Loan Trustee the right to
immediate possession and requiring Owner Trustee to execute and deliver such
instruments and documents to Loan Trustee, to the entry of which judgment Owner
Trustee hereby specifically consents to the fullest extent permitted by
applicable law, and (ii) pursue all or part of such Mortgaged Property wherever
it may be found and, in the event that a Lease Event of Default has occurred and
is continuing, may enter any of the premises of Lessee wherever such Mortgaged
Property may be or be supposed to be and search for such Mortgaged Property and
take possession of and remove such Mortgaged Property. All expenses of obtaining
such judgment or of pursuing, searching for and taking such property shall,
until paid, be secured by the Lien of this Indenture.
(b) Upon every such taking of possession, Loan Trustee may, from
time to time, at the expense of the Mortgaged Property, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modifications or alterations to and of the
Mortgaged Property, as it may deem proper. In each such case, Loan Trustee shall
have the right to maintain, use, operate, store, insure, lease, control, manage,
dispose of, modify or alter the Mortgaged Property and to carry on the business
and to exercise all rights and powers of Owner Participant and Owner Trustee
relating to the Mortgaged Property, as Loan Trustee shall deem best, including
the right to enter into any and all such agreements with respect to the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modification or alteration of the Mortgaged Property or any part
thereof as Loan Trustee may determine, and Loan Trustee shall be entitled to
collect and receive directly all tolls, rents (including Rent), revenues,
issues, income, products and profits of the Mortgaged Property and every part
thereof, except Excluded Payments, without prejudice, however, to the right of
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 (including Rent), revenues, issues, income, products and profits
shall be applied to pay the expenses of the maintenance, use, operation,
storage, insurance, leasing, control, management, disposition, improvement,
modification or alteration of the Mortgaged Property and of conducting the
business thereof, and to make all payments which Loan Trustee may be required or
may elect to make, if any, for taxes, assessments, insurance or other proper
charges upon the Mortgaged Property or any part thereof (including the
employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of Owner Trustee), and all other
payments which Loan Trustee may be required or authorized to make under any
provision of this Indenture, as well as just and reasonable compensation for the
services of Loan Trustee, and of all persons properly engaged and employed by
Loan Trustee with respect hereto.
Section 4.06 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 Owner Trustee or Lessee or to be an
acquiescence therein.
Section 4.07 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 Owner Trustee, Lessee and Loan Trustee
shall, subject to any determination in such proceedings, be restored to their
former positions and rights hereunder with respect to the Indenture Estate, and
all rights, remedies and powers of Loan Trustee shall continue as if no such
proceedings had been undertaken (but otherwise without prejudice).
Section 4.08 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 Indenture Event of Default arising therefrom shall be
deemed to have been cured for every purpose of the Operative Documents, but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon; provided, however, that in the absence of written
instructions from each of the affected Noteholders, Loan Trustee shall not waive
any default (i) in the payment of the principal amount, Make-Whole Amount, if
any, or interest due under any Equipment Note then outstanding (other than with
the consent of the holder thereof), or (ii) in respect of a covenant or
provision hereof which, under Article IX, cannot be modified or amended without
the consent of each such affected Noteholder.
Section 4.09 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
Mortgaged Property, whether such receivership be incidental to a proposed sale
of the Mortgaged Property or the taking of possession thereof or otherwise, and
Owner Trustee hereby consents to the appointment of such a receiver and will not
oppose any such appointment. Any receiver appointed for all or any part of the
Mortgaged Property shall be entitled to exercise all the rights and powers of
Loan Trustee with respect to the Mortgaged Property.
Section 4.10 Loan Trustee Authorized to Execute Bills of Sale, Etc.
Owner Trustee irrevocably appoints Loan Trustee the true and lawful
attorney-in-fact of Owner Trustee in its name and stead and on its behalf, for
the purpose, if an Event of Default shall have occurred and be continuing, of
effectuating any sale, assignment, transfer or delivery for the enforcement of
the Lien of this Indenture in accordance with the terms hereof, whether pursuant
to foreclosure or power of sale, assignments and other instruments as may be
necessary or appropriate, with full power of substitution, Owner Trustee hereby
ratifying and confirming all that such attorney or any substitute shall do by
virtue hereof in accordance with applicable law. Nevertheless, if so requested
by Loan Trustee or any purchaser, Owner Trustee shall ratify and confirm any
such sale, assignment, transfer or 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.
Section 4.11 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 Make-Whole Amount, if any,
and interest on an Equipment Note on or after the respective due dates expressed
in such Equipment Note, or to bring suit for the enforcement of any such payment
on or after such respective dates in accordance with the terms hereof, shall not
be impaired or affected without the consent of such Noteholder.
Section 4.12 Noteholders May Not Bring Suit Except Under Certain
Conditions. A Noteholder of any Series shall not have the right to institute any
suit, action or proceeding at law or in equity or otherwise with respect to this
Indenture for the appointment of a receiver or for the enforcement of any other
remedy under this Indenture, unless:
(1) such Noteholder previously shall have given written notice to
Loan Trustee of a continuing Indenture 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 part of
the Indenture Estate, or the Lien of the Indenture on the Indenture Estate, or
the rights of Noteholders of such Series, (ii) obtain or seek to obtain priority
over or preference with respect to any other such Noteholder of such Series or
(iii) enforce any right under this Indenture, except in the manner provided in
this Indenture and for the equal, ratable and common benefit of all Noteholders
of such Series subject to the provisions of this Indenture.
ARTICLE V
DUTIES OF LOAN TRUSTEE
Section 5.01 Notice of Indenture Event of Default. If Loan Trustee
has Actual Knowledge of an Indenture Event of Default or of a default arising
from a failure by Lessee to pay when due any Rent, Loan Trustee shall promptly
give notice thereof to Owner Trustee, Owner Participant, Lessee and each
Noteholder. Subject to the terms of Sections 4.03, 4.04, 5.02 and 5.03, Loan
Trustee shall take such action, or refrain from taking such action, with respect
to such Indenture 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 Indenture 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 Indenture 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. If Loan Trustee shall at any time declare the Lease to be in default
pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce
this Indenture, Loan Trustee shall forthwith notify Owner Participant, Owner
Trustee, Lessee and Noteholders. 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, Owner Trustee or Owner Participant, as the case may be,
shall not be deemed to have knowledge of an Indenture Default or an Indenture
Event of Default unless notified in writing by Lessee, Owner Participant, Owner
Trustee or one or more Noteholders; provided, however, that Loan Trustee is
deemed to have Actual Knowledge of (i) the failure of Lessee to pay any
installment of Basic Rent when the same shall become due or (ii) the failure of
Lessee to maintain insurance as required under Section 11 of the Lease if Loan
Trustee receives written notice thereof from an insurer or insurance broker.
Section 5.02 Action upon Instructions; Certain Rights and
Limitations. (a) Subject to the terms of Section 2.19, 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 as
is specified in such instructions; (ii) give such notice or direction or
exercise such right, remedy or power under the Lease, the Participation
Agreement, the Purchase Agreement, or any other part of the Indenture Estate as
shall be specified in such instructions; and (iii) after the occurrence and
during the continuance of an Indenture Event of Default, approve as satisfactory
to Loan Trustee all matters required by the terms of the Lease to be
satisfactory to Owner Trustee, it being understood that without the written
instructions of a Majority in Interest of Noteholders, Loan Trustee shall not
approve any such matter as satisfactory to Loan Trustee; provided, that anything
contained in this Indenture, the Lease or the other Operative Documents to the
contrary notwithstanding:
(1) Owner Trustee or Owner Participant may, without the consent of
Loan Trustee, demand, collect, sue for or otherwise obtain all amounts
included in Excluded Payments from Lessee, exercise any election or option
or make any decision or determination or to give or receive any notice,
consent, waiver or approval in respect of any Excluded Payment and seek
legal or equitable remedies to require Lessee to maintain the insurance
coverage referred to in Section 11 of the Lease; provided, that the rights
referred to in this clause (1) shall not be deemed to include the exercise
of any remedies provided for in Section 15 of the Lease other than the
right to proceed by appropriate court action, either at law or in equity,
to enforce payment by Lessee of such amounts included in Excluded Payments
or performance by Lessee of such insurance covenant, or to recover damages
for the breach thereof or for specific performance of any covenant of
Lessee;
(2) (A) Loan Trustee shall not, without the consent of Owner
Trustee, execute or deliver amendments or modifications in respect of any
provisions of the Lease, and (B) unless an Indenture Event of Default and
a Loan Trustee Event shall have occurred and be continuing and except as
provided in clause (4) below, Loan Trustee shall not, without the consent
of Owner Trustee, which consent shall not be withheld if no right or
interest of Owner Trustee or Owner Participant shall be diminished or
impaired thereby, (i) enter into, execute or deliver waivers or consents
in respect of any of the provisions of the Lease, or (ii) approve any
accountants, engineers, appraisers or counsel as satisfactory to render
services for or issue opinions to Owner Trustee pursuant to the Operative
Documents; provided that, whether or not an Indenture Event of Default
shall have occurred and be continuing, no amendment, modification, waiver
or consent in respect of the Lease shall affect the amount or timing of,
or the right to enforce payment of, any Excluded Payment;
(3) whether or not an Indenture Default or Indenture Event of
Default has occurred and is continuing, Owner Trustee and Owner
Participant shall have the right, together with Loan Trustee, (i) to
receive from Lessee all notices, certificates, reports, filings, opinions
of counsel and other documents and all information which any thereof is
permitted or required to give or furnish to Owner Trustee or Lessor
pursuant to any Operative Document (including pursuant to Section 4.04 of
the Participation Agreement), (ii) to exercise inspection rights pursuant
to Section 12 of the Lease, (iii) to retain all rights with respect to
insurance maintained for its own account which Section 11(f) of the Lease
specifically confers on Lessor or Owner Participant, (iv) to exercise, to
the extent necessary to enable it to exercise its rights under Section
4.03 hereof, the rights of Lessor under Section 21 of the Lease and (v) to
give notices of default under Section 14 of the Lease;
(4) whether or not an Indenture Default or Indenture Event of
Default has occurred and is continuing, Owner Trustee shall have the right
to the exclusion of Loan Trustee to adjust upward Rent, Stipulated Loss
Values and Termination Values as provided in Section 3(d) of the Lease and
to select counsel with respect to any opinion relating to tax matters to
be delivered solely to Owner Participant;
(5) so long as no Loan Trustee Event has occurred and is continuing,
Owner Trustee shall have the right, to the exclusion of Loan Trustee, to
adjust the Special Purchase Price, [the Initial Installment, the Remaining
Installments,] as provided in Section 3(c) of the Lease or to adjust
downward any installment or amount of Basic Rent, Stipulated Loss Value or
Termination Value, as such installments and amounts are set forth in
Exhibits B-1, C and D, respectively, to the Lease, to the extent of the
portion of such installment or amount that would, under Section 3.01, 3.02
or 3.03, as the case may be, be distributable to Owner Trustee or Owner
Participant;
(6) whether or not an Indenture Default or Indenture Event of
Default has occurred and is continuing, Owner Trustee may, without the
consent of Loan Trustee, (i) solicit and make bids with respect to the
Aircraft under Section 9 of the Lease in respect of a termination of the
Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market
sales value" and "fair market rental value" under Section 19 of the Lease
for all purposes except following an Event of Default pursuant to Section
15 of the Lease, and (iii) make an election pursuant to and in accordance
with the provisions of Section 9(c) of the Lease; and
(7) so long as no Indenture Event of Default shall have occurred and
be continuing, except as provided in clauses (2) and (3) above, all rights
of "Lessor" under the Lease shall be exercised by Owner Trustee to the
exclusion of Loan Trustee including, without limitation, the right to (i)
exercise all rights with respect to Lessee's use and operation,
modification or maintenance of the Aircraft and any Engine which the Lease
specifically confers on Lessor, and (ii) consent to and approve any
assignment pursuant to Section 13 of the Lease; provided that the
foregoing shall not limit (A) any rights separately granted to Loan
Trustee under the Operative Documents or (B) the right of Loan Trustee to
receive any funds to be delivered to "Lessor" under the Lease (except with
respect to Excluded Payments) and under the Purchase Agreement.
Notwithstanding anything to the contrary contained herein, Loan
Trustee shall have the right, to the exclusion of Owner Trustee and Owner
Participant, to (A) declare the Lease to be in default under Section 15 thereof
and (B) subject only to the provisions of Sections 4.03, 4.04(a) and 2.19
hereof, exercise the remedies set forth in such Section 15 (other than in
connection with Excluded Payments) at any time that a Lease Event of Default
shall have occurred and be continuing.
Loan Trustee will execute and Owner Trustee will file or cause to be
filed such continuation statements with respect to financing statements relating
to the security interest created hereunder in the Indenture Estate as specified
by Lessee pursuant to Section 6.02(c) of the Participation Agreement or as may
be specified from time to time in written instructions of a Majority in Interest
of Noteholders (which instructions may, by their terms, be operative only at a
future date and which shall be accompanied by the form of such continuation
statement so to be filed). Loan Trustee will furnish to each Noteholder (and,
during the continuation of a Loan Trustee Event, to Owner Trustee and Owner
Participant), promptly upon receipt thereof, duplicates or copies of all
reports, notices, requests, demands, certificates and other instruments
furnished to Loan Trustee under the Lease or hereunder, including, without
limitation, a copy of any Termination Notice (as defined in the Lease) and a
copy of each report or notice received pursuant to Sections 9(a) and 11(e) of
the Lease, respectively, to the extent that the same shall not have been
furnished to such Noteholder pursuant hereto or to the Lease.
(b) If any Lease Event of Default shall have occurred and be
continuing and Owner Trustee shall not have cured fully such Lease Event of
Default under and in accordance with Section 4.03 hereof, on request of a
Majority in Interest of Noteholders, Loan Trustee shall declare the Lease to be
in default pursuant to Section 15 thereof and exercise those remedies specified
by such Noteholders. Loan Trustee agrees to provide to Noteholders, Owner
Trustee, Owner Participant and Lessee concurrently with such declaration by Loan
Trustee, notice of such declaration by Loan Trustee.
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 of the Lease or is
otherwise contrary to law.
Section 5.04 No Duties Except as Specified in Indenture or
Instructions. Loan Trustee shall not have any duty or obligation to manage,
control, lease, use, sell, operate, store, dispose of or otherwise deal with the
Aircraft or any other part of the Indenture Estate, 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. Loan Trustee agrees that it will
in its individual capacity and at its own cost and expense (but without any
right of indemnity in respect of any such cost or expense under Section 7.01),
promptly take such action as may be necessary duly to discharge all liens and
encumbrances on any part of the Indenture Estate which result from claims
against it in its individual capacity not related to the ownership of the
Aircraft or the administration of the Indenture Estate or any other transaction
pursuant to this Indenture or any document included in the Indenture Estate.
Section 5.05 No Action Except under Lease, 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
Indenture Estate except (i) as required by the terms of the Lease or (ii) in
accordance with the powers granted to, or the authority conferred upon, Owner
Trustee and Loan Trustee pursuant to this Indenture and in accordance with the
express terms hereof.
Section 5.06 Replacement Airframes and Replacement Engines.
At any time an Airframe or Engine is to be replaced under or
pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement
Engine, Owner Trustee shall direct Loan Trustee to execute and deliver to Owner
Trustee an appropriate instrument releasing such Airframe and/or Engine as
appropriate from the Lien of this Indenture and Loan Trustee shall execute and
deliver such instrument as aforesaid, but only upon compliance by Lessee with
the applicable provisions of Section 10 of the Lease and upon receipt by or
deposit with Loan Trustee of the following:
(1) A written request from Owner Trustee, requesting such release
specifically describing the Airframe and/or Engine(s) so to be released.
(2) A certificate signed by a duly authorized officer of Lessee
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe which shall be identified
by manufacturer, model, FAA registration number (or
other applicable registration information) and
manufacturer's serial number;
(ii) a description of the Replacement Airframe to be received
(including the manufacturer, model, FAA registration
number (or other applicable registration information)
and manufacturer's serial number) as consideration for
the Airframe to be released;
(iii) that the Replacement Airframe is of the same or an
improved model as the Airframe requested to be released
from this Indenture;
(iv) the value and utility (without regard to hours or
cycles) of the Replacement Airframe as of the date of
such certificate (which in the judgment of Lessee shall
be not less than the value and utility (without regard
to hours or cycles) of the Airframe requested to be
released (assuming no Event of Loss and that such
Airframe was in the condition and repair required to be
maintained under the Lease)); and
(v) that no Lease Event of Default and no
event which, with lapse of time or
notice, or both, would become a Lease
Event of Default, has occurred which has
not been remedied or waived, and that
Lessee will not be in default, by the
making and granting of the request for
release and the addition of a Replacement
Airframe, in the performance of any of
the terms and covenants of the Lease.
B. with respect to the replacement of any Engine:
(i) a description of the Engine which shall be identified by
manufacturer's serial number;
(ii) a description of the Replacement Engine (including the
manufacturer's name and serial number) as consideration
for the Engine to be released;
(iii) that such Replacement Engine is substantially the same
type as the Engine to be released (or an improved
model);
(iv) the value and utility (without regard to hours or
cycles) of the Replacement Engine as of the date of such
certificate (which value shall not be less than the
value and utility (without regard to hours or cycles) of
the Engine to be released (assuming no Event of Loss and
that such Engine was in the condition and repair
required to be maintained under the Lease));
(v) that each of the conditions specified in Section 10(b)
of the Lease with respect to such Replacement Engine
have been satisfied; and
(vi) that, with respect to the replacement of an Engine
pursuant to Section 9(c) of the Lease, no Lease Event of
Default has occurred which has not been remedied or
waived.
(3) (a) The appropriate instruments (i) transferring to Owner
Trustee title to the Replacement Airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning to
Owner Trustee the benefit of all manufacturer's and vendor's warranties
generally available with respect to such Replacement Airframe or Replacement
Engine, and a Trust Agreement and Indenture Supplement subjecting such
Replacement Airframe or Replacement Engine and any related warranty rights to
the lien of this Indenture.
(b) With respect to the replacement of any Engine, such
Uniform Commercial Code financing statements covering the Lien created by this
Indenture as deemed necessary or desirable by counsel for Loan Trustee to
protect the Lien under this Indenture in the Replacement Engine.
(4) A certificate from an independent aircraft engineer or
appraiser selected by Lessee confirming the accuracy of the information set
forth in clauses (2)A(iv) and (2)B(iv) of this Section 5.06.
(5) The opinion of counsel to Lessee (which may be internal
counsel of Lessee) addressed to Lessor and Loan Trustee stating that upon such
replacement, title to such Replacement Airframe or Replacement Engine has been
vested in Lessor and such Replacement Airframe or Replacement Engine has been
validly subjected to the Lien of this Indenture and covered by the Lease, the
instruments subjecting such Replacement Airframe or Replacement Engine to the
Lease and to the Lien of this Indenture, as the case may be, have been duly
filed for recordation pursuant to the Federal Aviation Act or any other law then
applicable to the registration of the Aircraft, and no further action, filing or
recording of any document is necessary or advisable in order to establish and
perfect the right, title, estate and interest of Owner Trustee to and the Lien
of this Indenture on such Replacement Aircraft or Replacement Engine.
Section 5.07 Indenture Supplements for Replacements.
If a Replacement Airframe or Replacement Engine is being substituted
as contemplated by Section 10 of the Lease, Owner Trustee and Loan Trustee agree
for the benefit of Noteholders and Lessee, subject to fulfillment of the
conditions precedent and compliance by Lessee with its obligations set forth in
Section 10 of the Lease and the requirements of Section 5.06 hereof with respect
to such Replacement Airframe or Replacement Engine, to execute and deliver a
Lease Supplement and an Indenture Supplement, as applicable, as contemplated by
Section 10 of the Lease.
Section 5.08 Effect of Replacement. In the event of the substitution
of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease,
(a) all provisions of this Indenture relating to the Airframe or Engine or
Engines being replaced shall be applicable to such Replacement Airframe or
Replacement Engine or Engines with the same force and effect as if such
Replacement Airframe or Replacement Engine or Engines were the same airframe or
engine or engines, as the case may be, as the Airframe or Engine or Engines
being replaced but for the Event of Loss with respect to the Airframe or Engine
or Engines being replaced, and (b) the provisions of this Indenture shall no
longer be applicable to the Airframe or Engine or Engines being replaced, which
shall be released from the Lien of this Indenture.
Section 5.09 Investment of Amounts Held by Loan Trustee. Any monies
held by Loan Trustee as assignee of Owner Trustee's right to hold monies for
security pursuant to Section 22(a) of the Lease shall be held in accordance with
the terms of such Section and Loan Trustee agrees, for the benefit of Lessee, to
perform the duties of Owner Trustee under such Section. Any monies held by Loan
Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant
to Section 3.02 or pursuant to any other provision of any other Operative
Document providing for amounts to be so held by Loan Trustee, 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 Owner Trustee and Lessee, or (ii) at
any time and from time to time, so long as no Indenture Event of Default shall
have occurred and be continuing, at the request of Owner Trustee in the case of
amounts held pursuant to the proviso to the first sentence of Section 3.01, and
otherwise at the request of Lessee, 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 Indenture Estate until so sold. Unless otherwise expressly provided in this
Indenture, 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 Indenture Estate 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 5.09 other than by reason of its willful
misconduct or negligence.
ARTICLE VI
OWNER TRUSTEE AND LOAN TRUSTEE
Section 6.01 Acceptance of Trusts and Duties. State Street accepts
the trusts and duties hereby created and applicable to it and agrees to perform
such duties, but only upon the terms of this Indenture and agrees to receive,
handle and disburse all monies received by it as Loan Trustee constituting part
of the Indenture Estate in accordance with the terms hereof. Owner Trustee in
its individual capacity and State Street shall have no liability hereunder
except (a) for their own willful misconduct or negligence, (b) in the case of
State Street, as provided in the fourth sentence of Section 2.03 and the last
sentence of Section 5.04 and of 5.09, (c) in the case of State Street, for
liabilities that may result from the inaccuracy of any representation or
warranty of State Street in the Participation Agreement or expressly made
hereunder and in the case of Owner Trustee, for liabilities that may result from
the inaccuracy of any representation or warranty of Owner Trustee expressly made
in its individual capacity in the Participation Agreement or in Section 4.01(b)
or 6.03 (or in any certificate furnished to Loan Trustee or any Noteholder in
connection with the transactions contemplated by the Operative Documents) and
(d) as otherwise expressly provided in the Operative Documents. Neither Owner
Trustee nor Loan Trustee shall be liable for any action or inaction of the other
or of Owner Participant.
Section 6.02 Absence of Certain Duties. In the case of Loan Trustee,
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, and, in the case of Owner Trustee,
except as provided in Section 4.01(b), Owner Trustee and Loan Trustee shall have
no duty (a) to see to any registration of the Aircraft or any recording or
filing of the Lease or 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 Lessee is in default with respect thereto, (c) to confirm, verify or
inquire into the failure to receive any financial statements of Lessee or (d) to
inspect the Aircraft at any time or ascertain or inquire as to the performance
or observance of any of Lessee's covenants under the Lease with respect to the
Aircraft. Owner Participant shall not have any duty or responsibility hereunder,
including, without limitation, any of the duties mentioned in clauses (a)
through (d) above; provided, that nothing contained in this sentence shall limit
any of the obligations of Owner Participant under the Participation Agreement or
relieve Owner Participant from any restriction under Section 4.03 hereof.
Section 6.03 No Representations or Warranties as to Aircraft or the
Documents. NEITHER LOAN TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR OWNER
TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST
AGREEMENT, NOR OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH
HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS
FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE
ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, except Owner Trustee in its individual
capacity warrants that (i) Owner Trustee has received on the Delivery Date
whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and
clear of Lessor Liens (including for this purpose Liens which would be Lessor
Liens but for the proviso in the definition of Lessor Liens) attributable to
Owner Trustee in its individual capacity. Neither Owner Trustee, in its
individual capacity or as Owner Trustee under the Trust Agreement, nor Loan
Trustee, in its individual or trust capacities, makes or shall be deemed to have
made any representation or warranty as to the validity, legality or
enforceability of this Indenture, the Trust Agreement, the Participation
Agreement, the Equipment Notes, the Lease, the Purchase Agreement, the Purchase
Agreement Assignment or the Manufacturer's Consent, or as to the correctness of
any statement contained in any thereof, except for the representations and
warranties of Owner Trustee made in its individual capacity and the
representations and warranties of Loan Trustee, in each case expressly made in
this Indenture or in the Participation Agreement. Noteholders and Owner
Participant make no representation or warranty hereunder whatsoever.
Section 6.04 No Segregation of Monies; No Interest. Subject to
Section 5.09 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 Section 10(f) or Section 11(g) of the Lease or by mandatory
provisions of law, and neither Loan Trustee nor any agent of Loan Trustee shall
be under any liability for interest on any moneys received by it hereunder;
provided, however, that any payments received, or applied hereunder, by Loan
Trustee shall be accounted for by Loan Trustee so that any portion thereof paid
or applied pursuant hereto shall be identifiable as to the source thereof.
Section 6.05 Reliance; Agents; Advice of Counsel. Neither Owner
Trustee nor Loan Trustee shall incur any liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Owner Trustee and Loan Trustee may accept a copy of a resolution of the
Board of Directors (or, in the case of Owner Participant which originally
executed the Participation Agreement, evidence of approval thereof) 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, Owner Trustee and
Loan Trustee may for all purposes hereof rely on a certificate, signed by a duly
authorized officer of Lessee, as to such fact or matter, and such certificate
shall constitute full protection to Owner Trustee and Loan Trustee for any
action taken or omitted to be taken by them in good faith in reliance thereon.
Loan Trustee shall assume, and shall be fully protected in assuming that Owner
Trustee is authorized by the Trust Agreement to enter into this Indenture and to
take all action to be taken by it pursuant to the provisions hereof, and shall
not inquire into the authorization of Owner Trustee with respect thereto. In the
administration of the trusts hereunder, each of Owner Trustee and Loan Trustee
may, with the consent of Lessee (such consent not to be unreasonably withheld),
(a) execute any of the trusts or powers hereof and perform its powers and duties
hereunder directly or through agents (including paying agents or registrars) or
attorneys, and (b) at the expense of the Indenture Estate, consult with counsel,
accountants and other skilled Persons to be selected and retained by it. Owner
Trustee and 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 Owner Trustee and Loan
Trustee shall have exercised reasonable care and judgment in selecting such
Persons).
Section 6.06 Capacity in Which Acting.
Owner Trustee acts hereunder solely as trustee as herein and in the
Trust Agreement provided, and not in its individual capacity, except as
otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
Section 6.07 Compensation.
Loan Trustee shall be entitled to reasonable compensation, including
expenses and disbursements (including the reasonable fees and expenses of
counsel), for all services rendered hereunder and shall, on and subsequent to an
Indenture Event of Default hereunder, have a priority claim on the Indenture
Estate for the payment of such compensation, to the extent that such
compensation shall not be paid by Lessee, and shall have the right, on and
subsequent to an Indenture Event of Default hereunder, to use or apply any
monies held by it hereunder in the Indenture Estate toward such payments. Loan
Trustee agrees that it shall have no right against Noteholders, Owner Trustee or
Owner Participant for any fee as compensation for its services as trustee under
this Indenture.
Section 6.08 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 6.08.
ARTICLE VII
INDEMNIFICATION OF LOAN TRUSTEE BY OWNER TRUSTEE
Section 7.01 Scope of Indemnification.
Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, hereby agrees, except as otherwise provided in Section 2.18 hereof, to
assume liability for, and does hereby indemnify, protect, save and keep harmless
Loan Trustee (in its individual and trust capacities), and its successors,
assigns, agents and servants, from and against any and all liabilities,
obligations, losses, damages, penalties, taxes (excluding any taxes payable by
Loan Trustee on or measured by any compensation received by Loan Trustee for its
services under this Indenture), claims, actions, suits, costs, expenses or
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever, which may be imposed on, incurred by or asserted against Loan
Trustee (whether or not also indemnified against by any other Person under any
other document) in any way relating to or arising out of this Indenture or any
other Operative Document to which it is a party or the enforcement of any of the
terms of any thereof, or in any way relating to or arising out of the
manufacture, purchase, acceptance, non-acceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft or any Engine (including, without limitation, latent
or other defects, whether or not discoverable, and any claim for patent,
trademark or copyright infringement), or in any way relating to or arising out
of the administration of the Indenture Estate or the action or inaction of Loan
Trustee hereunder, to the extent not reimbursed by Lessee. Without limiting the
foregoing, Loan Trustee agrees that, prior to seeking indemnification from the
Indenture Estate, it will demand, and take such action as it may in its
discretion determine to be reasonable to pursue, indemnification available to
Loan Trustee under the Lease or the Participation Agreement. Notwithstanding the
foregoing, Loan Trustee shall not be entitled to any indemnification for any
Taxes or Expenses to the extent relating to or arising from the willful
misconduct or negligence of Loan Trustee in the performance of its duties
hereunder or resulting from the inaccuracy of any representation or warranty of
Loan Trustee (in its individual capacity) referred to in Section 6.03 hereof, or
as provided in Section 6.01 hereof or in the last sentence of Section 5.04
hereof, or as otherwise excluded by the terms of Sections 4.02 and 4.03 of the
Participation Agreement from Lessee's indemnities under such Sections. In
addition, if necessary, Loan Trustee shall be entitled to indemnification from
the Indenture Estate for any liability, obligation, loss, damage, penalty,
claim, action, suit, cost, expense or disbursement indemnified against pursuant
to this Section 7.01 to the extent not reimbursed by Lessee or others, but
without releasing any of them from their respective agreements of reimbursement;
and to secure the same Loan Trustee shall have a prior Lien on the Indenture
Estate. Owner Trustee shall be subrogated to Loan Trustee's rights, if any, to
any indemnity payment from Lessee for the amounts paid by Owner Trustee under
this Section 7.01.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
Section 8.01 Notice of Successor Owner Trustee. In the case of any
appointment of a successor to Owner Trustee pursuant to the Trust Agreement
including upon any merger, conversion, consolidation or sale of substantially
all of the corporate trust business of Owner Trustee pursuant to the Trust
Agreement, the successor Owner Trustee shall give prompt written notice thereof
to Loan Trustee, Lessee and Noteholders.
Section 8.02 Resignation and Removal of Loan Trustee; 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 8.02. Loan
Trustee or any successor thereto must resign if at any time it ceases to be
eligible in accordance with the provisions of Section 8.02(c) and may resign at
any time without cause by giving at least 60 days' prior written notice to
Lessee, Owner Trustee, Owner Participant and each Noteholder. In addition, a
Majority in Interest of Noteholders (but only with the consent of Lessee so long
as no Lease Event of 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, Owner Trustee, Owner Participant, Lessee and each Noteholder. In
the case of the resignation or removal of Loan Trustee, a Majority in Interest
of Noteholders may appoint a successor Loan Trustee by an instrument signed by
such holders, which successor, so long as no Lease Event of Default shall have
occurred and be continuing, shall be subject to Lessee's reasonable approval. If
a successor Loan Trustee has not been appointed within 60 days after such notice
of resignation or removal, Loan Trustee, Lessee, Owner Trustee, Owner
Participant 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, Owner Trustee and Lessee 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 8.02(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 8.02(c), Loan Trustee shall resign immediately in the manner and
with the effect specified in Section 8.02(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 8.02(c),
be a successor Loan Trustee under this Indenture without further act.
Section 8.03 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 Indenture Estate is
situated or to make any claim or bring any suit with respect to or in connection
with the Indenture Estate, any Operative Document or any of the transactions
contemplated by the Operative Documents, (ii) Loan Trustee shall be advised by
counsel satisfactory to it that it is necessary or prudent in the interests of
Noteholders (and Loan Trustee shall so advise Owner Trustee and Lessee) 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, Owner Trustee, 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 8.02(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 Indenture Estate or to act as
separate trustee or trustees of all or any part of the Indenture Estate, 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 8.03. If no
Indenture Event of Default has occurred and is continuing, no additional or
supplemental trustee shall be appointed without Owner Trustee's consent. If an
Indenture Event of Default shall have occurred and be continuing, Loan Trustee
may act under the foregoing provisions of this Section 8.03(a) without the
concurrence of Owner Trustee, and Owner Trustee 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
8.03(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 8.03. In case any additional or
separate trustee appointed under this Section 8.03(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 8.03(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
Indenture Estate 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 Indenture Estate in any such jurisdiction) shall be exercised and
performed by such additional or separate trustee. No additional or separate
trustee shall take any discretionary action except on the instructions of 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 8.03 shall be subject to, and shall have the
benefit of Articles IV, V, VI, VIII and X hereof insofar as they apply to Loan
Trustee. The powers of any additional or separate trustee appointed pursuant to
this Section 8.03 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, Owner Trustee, shall execute and deliver an
indenture supplemental hereto and all other instruments and agreements necessary
or proper to remove any additional or separate trustee. Loan Trustee may act on
behalf of Owner Trustee under this Section 8.03(c) when and to the extent it
could so act under Section 8.03(a) hereof. In any case, Owner Trustee may remove
an additional or separate trustee in the manner set forth in Section 8.02.
ARTICLE IX
SUPPLEMENTS, AMENDMENTS AND WAIVERS
Section 9.01 Instructions of Majority; Limitations.
(a) Except as provided in Section 5.02, and except with respect to
Excluded Payments, Owner Trustee agrees it shall not enter into any amendment of
or supplement to the Lease, the Purchase Agreement, the Purchase Agreement
Assignment or the Manufacturer's Consent, or execute and deliver any written
waiver or modification of, or consent under, the terms of the Lease, the
Purchase Agreement, the Purchase Agreement Assignment or the Manufacturer's
Consent, unless such supplement, amendment, waiver, modification or consent is
consented to in writing by Loan Trustee and a Majority in Interest of
Noteholders. Anything to the contrary contained herein notwithstanding, without
the necessity of the consent of any of Noteholders or Loan Trustee, (i) any
Excluded Payments payable to Owner Participant may be modified, amended, changed
or waived in such manner as shall be agreed to by Owner Participant and Lessee
and (ii) Owner Trustee and Lessee may enter into amendments of or additions to
the Lease to modify Section 5 (except to the extent that such amendment would
affect the rights or exercise of remedies under Section 15 of the Lease),
Section 9 or Section 19 of the Lease so long as such amendments, modifications
and changes do not and would not affect the time of, or reduce the amount of,
Rent payments until after the payment in full of all Secured Obligations or
otherwise adversely affect Noteholders.
(b) Without limiting the provisions of Section 9.01(a) and subject
to Section 5.02(a)(2), Loan Trustee agrees with Noteholders that it shall not
enter into any amendment, waiver or modification of, supplement or consent to
this Indenture, the Lease, the Purchase Agreement, the Purchase Agreement
Assignment, the Manufacturer's Consent, or the Participation Agreement, or any
other agreement included in the Indenture Estate, unless such supplement,
amendment, waiver, modification or consent is consented to in writing by a
Majority in Interest of Noteholders, or does not adversely affect Noteholders,
but upon the written request of a Majority in Interest of Noteholders, Loan
Trustee shall from time to time enter into any such supplement or amendment, or
execute and deliver any such waiver, modification or consent, as may be
specified in such request and as may be (in the case of any such amendment,
supplement or modification), to the extent such agreement is required, agreed to
by Owner Trustee and Lessee or, as may be appropriate, Manufacturer; provided,
however, that, without the consent of each holder of an affected Equipment Note
then outstanding, no such amendment of or supplement to this Indenture, the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the
Manufacturer's Consent or the Participation Agreement or waiver or modification
of the terms of, or consent under, any thereof, shall (i) modify any of the
provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11, 2.13, 4.02,
4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an Event of
Default) of the Lease, the definitions of "Event of Default", "Default", "Lease
Event of Default", "Lease Default", "Indenture Event of Default", "Majority in
Interest of Noteholders", "Make-Whole Amount" or "Noteholder", or the percentage
of Certificate Holders required to take or approve any action hereunder, (ii)
reduce the amount, or change the time of payment or method of calculation of any
amount, of principal amount, Make-Whole Amount, if any, or interest with respect
to any Equipment Note, or alter or modify the provisions of Article III hereof
with respect to the order of priorities in which distribution thereunder shall
be made as among Noteholders, Owner Trustee and Lessee, (iii) reduce, modify or
amend any indemnities in favor of Noteholders, (iv) consent to any change in the
Indenture or the Lease which would permit redemption of Equipment Notes earlier
than permitted under Section 2.10 or 2.11 or the purchase of the Equipment Notes
other than as permitted by Section 2.19, (v) modify any of the provisions of
Section 3(c)(iv) of the Lease, or modify, amend or supplement the Lease or
consent to any assignment of the Lease, in either case releasing Lessee from its
obligations in respect of the payment of Basic Rent, Stipulated Loss Value or
Termination Value for the Aircraft or altering the absolute and unconditional
character of the obligations of Lessee to pay Rent as set forth in Sections 3
and 18 of the Lease or (vi) permit the creation of any Lien on the Indenture
Estate or any part thereof prior to or pari passu with the Lien thereon under
this Indenture, except such as are permitted by this Indenture and other than
Permitted Liens, or deprive any Noteholder of the benefit of the Lien of this
Indenture on the Indenture Estate, except as provided in connection with the
exercise of remedies under Article IV hereof. So long as no Lease Event of
Default has occurred and is continuing, without the consent of Lessee no
amendment or supplement to this Indenture or waiver or modification of the terms
hereof shall adversely affect Lessee.
(c) At any time after the date hereof, Owner Trustee and Loan
Trustee may enter into one or more agreements supplemental hereto without the
consent of any Noteholder for any of the following purposes: (i) to cure any
defect, ambiguity or inconsistency or correct any mistake herein or in the
Equipment Notes, or to make any change not inconsistent with the provisions
hereof (provided that such change does not adversely affect the interests of any
Noteholder or Liquidity Provider); (ii) to evidence the succession of another
party as Owner Trustee in accordance with the terms of the Trust Agreement or to
evidence the succession of a new trustee hereunder pursuant hereto, the removal
of the trustee pursuant hereto or the appointment of any co-trustee or
co-trustees or any separate or additional trustee or trustees pursuant hereto;
(iii) to convey, transfer, assign, mortgage or pledge any property to or with
Loan Trustee or to make any other provisions with respect to matters or
questions arising hereunder so long as such action shall not adversely affect
the interests of Noteholders in their capacity solely as Noteholder; (iv) to
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, the Airframe or
Engines or any Replacement Airframe or Replacement Engine; (v) to add to the
covenants of Owner Trustee for the benefit of Noteholders, or to surrender any
rights or power herein conferred upon Owner Trustee, Owner Participant or
Lessee; and (vi) to add to the rights of Noteholders.
Section 9.02 Trustees Protected. If, in the reasonable opinion of
the institution acting as Owner Trustee under the Trust Agreement or the
institution acting as Loan Trustee, any document required to be executed by it
pursuant to the terms of Section 9.01 adversely affects any right, duty,
immunity or indemnity with respect to such institution under this Indenture or
the Lease, such institution may in its discretion decline to execute such
document.
Section 9.03 Documents Mailed to Noteholders. Promptly after the
execution by Owner Trustee and Loan Trustee of any document pursuant to the
provisions of Section 9.01, Loan Trustee shall transmit by first-class mail a
notice, setting forth in general terms the substance of such document, 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 document.
Section 9.04 No Request Necessary for Lease Supplement and Indenture
Supplement. No written request or consent of Loan Trustee, Noteholders or Owner
Participant pursuant to Section 9.01 shall be required to enable Owner Trustee
to enter into any Lease Supplement specifically required by the terms of the
Lease or to execute and deliver an Indenture Supplement specifically required by
the terms hereof.
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.
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination of Indenture. Upon (or at any time after)
payment in full of the principal amount, Make-Whole Amount, if any, and interest
on and all other amounts due under all Equipment Notes and provided that there
shall then be no other Secured Obligations due to Noteholders, Indenture
Indemnitees and Loan Trustee hereunder or under the Participation Agreement,
Owner Trustee 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 Owner Trustee
without any other act or formality whatsoever, and Loan Trustee shall, upon the
written request of Owner Trustee, execute and deliver to, or as directed in
writing by, Owner Trustee an appropriate instrument (in due form for recording)
releasing the Aircraft and the balance of the Indenture Estate from the Lien of
this Indenture together with such other instruments and documents as Owner
Trustee reasonably requests to give effect to the release and termination and
shall give written notice thereof to Lessee, 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 Indenture Estate and the final distribution by
Loan Trustee of all monies or other property or proceeds constituting part of
the Indenture Estate 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.
Section 10.02 No Legal Title to Indenture Estate in Noteholders. No
Noteholder shall have legal title to any part of the Indenture Estate. 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 Indenture Estate 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 Indenture Estate.
Section 10.03 Sale of Aircraft by Loan Trustee is Binding. Any sale
or other conveyance of the Indenture Estate (or any interest therein) by Loan
Trustee made pursuant to the terms of this Indenture shall bind Noteholders,
Owner Participant and Owner Trustee and shall be effective to transfer or convey
all right, title and interest of Loan Trustee, Owner Participant, Owner Trustee
and such Noteholders in and to such Indenture Estate (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 Owner Trustee, Owner
Participant, Lessee, Loan Trustee and Noteholders. Nothing in this Indenture,
whether express or implied, shall be construed to give any Person other than
Owner Trustee, Owner Participant, Lessee, Loan Trustee, Noteholders or the other
Indenture Indemnitees any legal or equitable right, remedy or claim under or in
respect of this Indenture.
Section 10.05 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents required or permitted under the terms
and provisions of this Indenture shall be in English and in writing, and given
by United States registered or certified mail, courier service or facsimile, and
any such notice shall be effective when delivered (or, if delivered by
facsimile, upon completion of transmission and confirmation by the sender (by a
telephone call to a representative of the recipient or by machine confirmation)
that such transmission was received) addressed as specified in Section 16.01 of
the Participation Agreement, or if to any Noteholder, addressed to such
Noteholder at its address set forth in the Equipment Note Register maintained
pursuant to Section 2.07 hereof.
Any party, by notice to the other parties hereto, may designate
different addresses for subsequent notices or communications. Whenever the words
"notice" or "notify" or similar words are used herein, they mean the provision
of formal notice as set forth in this Section 10.05.
Section 10.06 Severability. Any provision of this Indenture that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 10.07 No Oral Modification or Continuing Waivers. No terms
or provisions of this Indenture or of the Equipment Notes may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by Owner Trustee 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. This Indenture and the Indenture Estate shall not be
affected by any amendment or supplement to the Trust Agreement or by any other
action taken under or in respect of the Trust Agreement, except that each
reference in this Indenture to the Trust Agreement shall mean the Trust
Agreement, as amended and supplemented from time to time to the extent permitted
hereby, thereby and by the Participation Agreement. Each 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, Owner Trustee, Loan Trustee,
Owner Participant, 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 Lessee, 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 Lessee 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 that
Owner Trustee, as lessor under the Lease (and Loan Trustee as assignee of Owner
Trustee hereunder), shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft, Airframe, Engines and
Parts as provided in the Lease and to enforce any of its other rights and
remedies in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor, and in any instance where more than one construction is
possible of the terms and conditions hereof or any other pertinent Operative
Document, each such party agrees that a construction which would preserve such
benefits shall control over any construction which would not preserve such
benefits.
Section 10.13 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 10.14 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 10.15 No Action Contrary to Lessee's Rights Under the Lease.
Notwithstanding any provision of this Indenture or the Trust
Agreement to the contrary, neither Loan Trustee nor Owner Trustee will take any
action contrary to Lessee's rights under the Lease, including the right to
possession and use of, and the quiet enjoyment of, the Aircraft, except in
accordance with the provisions of the Lease.
Section 10.16 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.
- -------------
(9) To be inserted on installment Equipment Notes.
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Indenture to be duly executed by their respective officers thereof duly
authorized, as of the date first above written.
WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual
capacity, except as expressly provided
herein, but solely as Owner Trustee,
By:______________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not in
its individual capacity, except as
expressly provided herein, but solely as
Loan Trustee
By:______________________________________
Name:
Title:
EXHIBIT A to
AMENDED AND
RESTATED INDENTURE
AND SECURITY
AGREEMENT
INDENTURE SUPPLEMENT NO. ___
INDENTURE SUPPLEMENT NO. __ , dated _____________, ____ ("Indenture
Supplement"), between WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in
its individual capacity, but solely as Owner Trustee ("Owner Trustee") under
that certain Trust Agreement (N____) dated as of [_______________] (the "Trust
Agreement"), between Owner Trustee and Owner Participant named therein and STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Loan Trustee under the Indenture (each as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Amended and Restated Indenture and Security Agreement
(N[_____]), dated as of [__________ __, 200_] (the "Indenture"; capitalized
terms used herein without definition shall have the meanings specified therefor
in Annex A to the Indenture), between Owner Trustee and State Street Bank and
Trust Company of Connecticut, National Association, not in its individual
capacity, except as expressly provided therein, but solely as Loan Trustee
("Loan Trustee"), provides for the execution and delivery of supplements thereto
substantially in the form hereof which shall particularly describe the Aircraft,
and shall specifically grant a security interest in the Aircraft to Loan
Trustee; and
[WHEREAS, the Indenture relates to the Airframe and Engines
described in Annex A attached hereto and made a part hereof, and a counterpart
of the Indenture is attached to and made a part of this Indenture Supplement;]*
[WHEREAS, Owner Trustee 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 the performance and
observance by Owner Trustee of all the agreements and covenants to be performed
or observed by Owner Trustee for the benefit of Noteholders and Indenture
Indemnitees contained in the Operative Documents, and in consideration of the
premises and of the covenants contained in the Operative Documents, and for
other good and valuable consideration given by Loan Trustee, Noteholders and
Indenture Indemnitees to Owner Trustee at or before the Delivery Date, the
receipt of which is hereby acknowledged, Owner Trustee 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 Owner Trustee 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;
Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.
To have and to hold all and singular the aforesaid property unto
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.
Owner Trustee hereby acknowledges that the Aircraft referred to in
this Indenture Supplement has been delivered to Owner Trustee and is included in
the property of Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Indenture.
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.
WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual
capacity, except as expressly provided
herein, but solely as Owner Trustee
By:____________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, as
Loan Trustee
By:____________________________________
Name:
Title:
- -------------
* Use for Indenture Supplement No. 1 only.
** Use for all Indenture Supplements other than Indenture Supplement No. 1.
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.
SCHEDULE I
to AMENDED AND
RESTATED INDENTURE
AND SECURITY
AGREEMENT
DESCRIPTION OF EQUIPMENT NOTES
Original Principal Amount Interest Rate Maturity Date
------------------------- ------------- -------------
Series G-1
Equipment Notes: $[___________] 6.718% [___________]
Series G-2
Equipment Notes: $[___________] 6.417% July 2, 2012
Series C
Equipment Notes: $[___________] 7.779% [___________]
EQUIPMENT NOTES AMORTIZATION
SERIES G-1 EQUIPMENT NOTES
Percentage of
Original Principal Amount
Payment Date to be Paid
------------ ----------
The portion of this Schedule appearing below this text is intentionally deleted
from the FAA filing counterpart because the parties hereto deem it to contain
confidential information.
EQUIPMENT NOTES AMORTIZATION
SERIES C EQUIPMENT NOTES
Percentage of
Original Principal Amount
Payment Date to be Paid
------------ ----------
The portion of this Schedule appearing below this text is intentionally deleted
from the FAA filing counterpart because the parties hereto deem it to contain
confidential information.
SCHEDULE II
to AMENDED AND
RESTATED INDENTURE
AND SECURITY
AGREEMENT
PASS THROUGH TRUST AGREEMENT AND
PASS THROUGH TRUST SUPPLEMENTS
Pass Through Trust Agreement, dated as of November 16, 2000, between Delta
Air Lines, Inc. and State Street Bank and Trust Company of Connecticut,
National Association, as trustee, as supplemented by Trust Supplement No.
2002-1G-1, dated as of April 30, 2002, Trust Supplement No. 2002-1G-2, dated
as of April 30, 2002, and Trust Supplement No. 2002-1C, dated as of April 30,
2002.
EXHIBIT J TO
PARTICIPATION AGREEMENT
FORM OF PURCHASE AGREEMENT ASSIGNMENT
================================================================================
PURCHASE AGREEMENT ASSIGNMENT
(N____)
Dated as of [______ __, 200_]
between
DELTA AIR LINES, INC.,
Assignor
and
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
Assignee
---------------
One Boeing 737-832 Aircraft
================================================================================
PURCHASE AGREEMENT ASSIGNMENT
(N____)
This PURCHASE AGREEMENT ASSIGNMENT (N____), dated as of [______ __,
200_] between DELTA AIR LINES, INC., a Delaware corporation ("Assignor"), and
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual capacity
but solely as Owner Trustee ("Assignee") (the "Assignment").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement No. 2022, dated as of
October 21, 1997 between Assignor and Manufacturer, which incorporates by
reference the Aircraft General Terms Agreement AGTA-DAL, dated as of October 21,
1997 between Assignor and Manufacturer ("AGTA-DAL") (the "Purchase Agreement"),
Manufacturer has agreed to sell and Assignor has agreed to purchase several
Boeing 737-832 aircraft, including the Aircraft covered by the Participation
Agreement;
WHEREAS, pursuant to the Participation Agreement, Assignor has
agreed to sell and Assignee has agreed to purchase, the Aircraft;
WHEREAS, Assignor and Assignee are entering into a Lease Agreement
(N_____), dated as of the date hereof (as the same may hereafter from time to
time be supplemented, amended or modified, the "Lease"), pursuant to which the
Aircraft will be leased by Assignee to Assignor; and
WHEREAS, Assignor, on the terms and conditions herein and in the
Manufacturer's Consent dated as of the date hereof executed by Manufacturer
attached hereto (the "Manufacturer's Consent"), desires to assign to Assignee
certain of Assignor's rights and interests in and under the Purchase Agreement
relating to the Aircraft, and Assignee desires to accept such assignment, as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
1. Assignment; Rights Reserved. Subject to the provisions of
paragraph 3(a) hereof, Assignor does hereby sell, assign, transfer and set over
unto Assignee, except to the extent reserved below, all of Assignor's right,
title and interest in, to and under Parts 1,2,3,4 and 6 of the Product Assurance
Document attached as Exhibit C to the AGTA-DAL, but only to the extent that the
same relate to the continuing rights of Assignor in respect of any warranty or
indemnity, express or implied, pursuant to the Product Assurance Document with
respect to the Airframe (collectively, the "Warranty Rights").
2. Acceptance of Assignment. Assignee hereby accepts the assignment
contained in paragraph 1 hereof.
3. Rights of Assignor in Absence of Event of Default.
(a) With respect to the assignment contained in paragraph 1 hereof,
and notwithstanding the foregoing, if and so long as (A) the Aircraft is subject
to the Lease and (B) Manufacturer has not received notice from Loan Trustee or
Owner Trustee (including by mail, courier, telecopy or telex thereof from Loan
Trustee or Owner Trustee addressed to Manufacturer's Vice President, Contracts,
at P.O. Box 3707, Mail Code 21-34, Seattle, Washington 98124, if by mail; 1901
Oaksdale Ave., S.W., Mail Code 21-34, Renton, Washington 98055, if by courier;
425-237-1706 if by telecopy; and 32-9430 (Answerback BOEINGREN RNTN), if by
telex), that an Event of Default under the Lease has occurred and is continuing,
(1) Assignee authorizes Assignor, on behalf of but to the exclusion of Assignee,
to exercise in Assignor's own name (i) all rights and powers related to the
Warranty Rights as and to the extent the same relate to the Aircraft and (ii)
subject to paragraph 3(c) hereof, to retain any recovery or benefit resulting
from the enforcement of the Warranty Rights as and to the extent the same relate
to the Aircraft, and (2) Assignee shall, at Assignor's expense, cooperate with
Assignor and take such actions as Assignor reasonably deems necessary to enable
Assignor to enforce such rights and claims.
(b) Effective upon the receipt by Manufacturer of written notice
from Loan Trustee or Owner Trustee that an Event of Default under the Lease has
occurred and is continuing and thereafter until Manufacturer has received
written notice from Loan Trustee or Owner Trustee that such Event of Default has
been cured or waived: (i) at Assignee's option, the authorization given to
Assignor under paragraph 3(a) hereof to enforce such rights and claims shall
henceforth cease to be effective and Assignee and its successors and permitted
assigns shall, to the exclusion of Assignor, be entitled to assert and enforce
such rights and claims as substitute party plaintiff or otherwise, and Assignor
shall, at the request of Assignee or its successors or assigns and at Assignor's
expense, cooperate with and take such action as reasonably necessary to enable
Assignee and its successors and assigns to enforce such rights and claims, and
Assignee, if it elects to enforce such rights or claims, shall use its best
efforts to assert and enforce such rights and claims, and (ii) Assignor will be
deemed to have irrevocably constituted Assignee and its successors and permitted
assigns Assignor's true and lawful attorney (it being acknowledged that such
appointment is coupled with an interest, namely Assignee's rights acquired and
to be acquired hereunder) with full power (in the name of Assignor or otherwise)
to ask, require, demand, receive, settle, compromise, compound and give
acquittance for any and all monies and claims for monies due and to become due
under, or arising out of, the Warranty Rights as and to the extent the same
relate to the Aircraft, to the extent that the same have been assigned by this
Assignment, and for such period as Assignee may exercise rights with respect
thereto under this clause (ii), to endorse any checks or other instruments or
orders in connection therewith and to file any claims or take any action or
institute (or, if previously commenced, assume control of) any proceedings and
to obtain any recovery in connection therewith which Assignee may deem to be
necessary or advisable in the premises.
(c) Notwithstanding this Assignment and anything herein to the
contrary, all amounts that Manufacturer is obligated to pay to Assignor pursuant
to the Warranty Rights as and to the extent the same relate to the Aircraft (a
"Manufacturer Payment"), will be payable and applicable as follows: so long as
the Aircraft is subject to the Lease, all the Manufacturer Payments shall be
paid to Assignor unless and until Manufacturer has received written notice from
Loan Trustee or Owner Trustee that an Event of Default under the Lease has
occurred and is continuing, whereupon Manufacturer will, until Manufacturer has
received written notice from Loan Trustee or Owner Trustee that such Event of
Default under the Lease have been cured or waived, make any and all such
payments directly to Loan Trustee or (if written notice has been given to
Manufacturer by Assignee that the Indenture is no longer in effect in accordance
with its terms and all amounts due and payable under the Equipment Notes have
been paid in full) Assignee. Any amounts received by Assignee pursuant to the
immediately preceding sentence shall, to the extent not theretofore applied in
satisfaction of sums owing to Assignee in accordance with the terms of the
Lease, be returned to Assignor promptly after all Events of Default under the
Lease have been cured or waived.
(d) For all purposes of this Assignment, Manufacturer shall not be
deemed to have received written notice from Loan Trustee or Owner Trustee that
an Event of Default under the Lease has occurred and is continuing or that all
Events of Default have been cured or waived unless and until Manufacturer has
received written notice thereof from Owner Trustee or Loan Trustee addressed to
Manufacturer's Vice President, Contracts, at P.O. Box 3707, Mail Code 21-34,
Seattle, Washington 98124, (Telex: 32-9430, Answerback BOEINGREN RNTN) and, in
acting in accordance with the terms and conditions of the Purchase Agreement and
this Assignment, Manufacturer may rely conclusively upon any such notice. With
respect to the rights, powers, duties and obligations of "Customer" under the
Purchase Agreement, all actions taken or agreements entered into by Assignor
during the period prior to Manufacturer's receipt of such notice are final and
binding on Assignee and Loan Trustee. In the event of receipt by Manufacturer of
conflicting notice, notice from Loan Trustee shall control.
4. Certain Rights and Obligations of the Parties.
(a) Anything herein contained to the contrary notwithstanding: (i)
Assignor shall at all times remain liable to Manufacturer under the Purchase
Agreement in respect of the Aircraft to perform all of the duties and
obligations of the "Customer" thereunder to the same extent as if this
Assignment had not been executed; (ii) the exercise by Assignee of any of the
rights assigned hereunder shall not release Assignor from any of its duties or
obligations to Manufacturer under the Purchase Agreement in respect of the
Aircraft except to the extent that such exercise by Assignee constitutes
performance of such duties and obligations; and (iii) except as provided in
paragraph 4(b) hereof, Assignee shall not have any obligation or liability under
the Purchase Agreement by reason of, or arising out of, this Assignment or be
obligated to perform any of the obligations or duties of Assignor under the
Purchase Agreement or to make any payment or make any inquiry as to the
sufficiency of any payment received by it or to present or to file any claim or
to take any other action to collect or enforce any claim for any payment
assigned hereunder.
(b) Without in any way releasing Assignor from any of its duties or
obligations under the Purchase Agreement, Assignee confirms for the benefit of
Manufacturer that, insofar as the provisions of the Purchase Agreement relate to
the Aircraft, in exercising any rights under the Purchase Agreement, or in
making any claim with respect to the Warranty Rights, the terms and conditions
of the Purchase Agreement shall apply to, and be binding upon, Assignee to the
same extent as Assignor. Assignee hereby confirms that it shall be deemed for
all purposes to have read and be familiar with the Purchase Agreement (insofar
as it relates to the Aircraft) and to understand thoroughly the terms and
conditions thereof.
(c) Nothing contained herein shall (i) subject Manufacturer to any
liability to which it would not otherwise be subject under the Purchase
Agreement or (ii) modify in any respect Manufacturer's contract rights
thereunder, except as provided in the Manufacturer's Consent attached hereto.
(d) The parties hereto, and Manufacturer by its execution and
delivery of the Manufacturer's Consent, agree that all of the statements,
representations, covenants and agreements made by Assignee as Owner Trustee
(when made in such capacity) contained in this Assignment and any agreement
referred to herein or in the Participation Agreement other than the Trust
Agreement, unless expressly otherwise stated, are made and intended only for the
purpose of binding the Trust Estate and establishing the existence of rights and
remedies which can be exercised and enforced against the Trust Estate.
Therefore, anything contained in this Assignment or such other agreements to the
contrary notwithstanding (except for any express provisions that Assignee is
responsible for in its individual capacity), no recourse shall be had with
respect to this Assignment or such other agreements against Assignee in its
individual capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling person or persons of any of them;
provided, however, that this Section 4(d) shall not be construed to prohibit any
action or proceeding against Wells Fargo Bank Northwest, National Association,
for its own willful misconduct or negligent conduct for which it would otherwise
be liable; and provided, further, that nothing contained in this Section 4(d)
shall be construed to limit the exercise and enforcement in accordance with the
terms of this Assignment or such other agreements of rights and remedies against
the Trust Estate. The foregoing provisions of this Section 4(d) shall survive
the termination of this Assignment and the other Operative Documents.
5. Further Assurances. Assignor agrees that at any time and from
time to time Assignor will promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as Assignee
may reasonably request in writing in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted, provided, however, that
the execution and delivery of any such instrument or document shall not in any
way limit or restrict the rights or enlarge the obligations of Assignor in
respect of any of the Operative Documents.
6. Assignor's Representations, Warranties and Covenants. Assignor
hereby represents and warrants that, except for an assignment of the rights
hereby assigned pursuant to the Original Indenture (such assignment to be
released on the Delivery Date), Assignor has not assigned or pledged, and hereby
covenants that it will not assign or pledge, so long as this Assignment remains
in effect, the whole or any part of the rights hereby assigned to anyone other
than Assignee.
7. No Amendment of Purchase Agreement. Assignee agrees that it will
not enter into any amendment, modification, supplement, rescission, cancellation
or termination of the Purchase Agreement in respect of the Warranty Rights, as
and to the extent the same relate to the Aircraft, without the prior written
consent of Assignor.
8. Execution of Assignment. This Assignment is being executed and
delivered by Assignor and Assignee concurrently with the execution and delivery
of the Lease.
9. Binding Effect. This Assignment shall be binding upon and shall
inure to the benefit of Assignor, Assignee and their respective successors and
permitted assigns.
10. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS ASSIGNMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.
11. Definitions. All terms not defined herein, which are used herein
in capitalized form and which are defined in the Lease, shall when used herein
have the meanings specified or referred to in the Lease.
12. Notice. Except as otherwise expressly provided herein, notice
hereunder may be given, and shall be deemed to have been received when given, as
provided in Section 17 of the Lease.
13. Counterparts. This Assignment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed as of the day and year first above
written.
DELTA AIR LINES, INC.,
as Assignor
By: ____________________________________
Name:
Title:
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee,
as Assignee
By: ____________________________________
Name:
Title:
The undersigned, not in its individual capacity but solely as Loan
Trustee for the benefit of the holders of the Equipment Notes and as assignee
of, and holder of a security interest in and to the foregoing Purchase Agreement
Assignment and the Purchase Agreement pursuant to such Purchase Agreement
Assignment, agrees to the terms of the foregoing Purchase Agreement Assignment
and agrees that its rights and remedies under such Purchase Agreement Assignment
shall be subject to the terms and conditions thereof and of the Purchase
Agreement.
STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Loan Trustee
By: ____________________________________
Name:
Title:
EXHIBIT K TO
PARTICIPATION AGREEMENT
FORM OF TRUST AGREEMENT
================================================================================
TRUST AGREEMENT
(N_____)
Dated as of [____________, 200_]
between
[_______________________],
Owner Participant
and
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
Owner Trustee
One Boeing 737-832
Aircraft
================================================================================
TRUST AGREEMENT
(N_____)
This TRUST AGREEMENT (N_____) dated as of [___________, 200_]
between [_____________________], a [___________] corporation ("Original Owner
Participant"), and WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national
banking association (in its individual capacity, "Wells Fargo") and otherwise
not in its individual capacity but solely as trustee hereunder (herein in such
capacity with its permitted successors and assigns called "Owner Trustee");
W I T N E S S E T H:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.01. Certain Definitions. Unless the context shall
otherwise require and except as contained in this Section 1.01, the capitalized
terms used herein have the respective meanings assigned thereto in the Lease (as
hereinafter defined) for all purposes hereof. All definitions contained in this
Section 1.01 shall be equally applicable to both the singular and plural forms
of the terms defined. For all purposes of this Trust Agreement the following
terms shall have the following meanings:
"Lease" means that certain Lease Agreement (N_____), to be dated as
of the date hereof, and to be entered into by Owner Trustee and Lessee
concurrently with the execution and delivery of this Trust Agreement, as said
Lease Agreement may from time to time be supplemented or amended, or the terms
thereof waived or modified, to the extent permitted by, and in accordance with,
the terms of this Trust Agreement. The term "Lease" shall also include each
Lease Supplement from time to time entered into pursuant to the terms of the
Lease.
"Lessee" means Delta Air Lines, Inc., a Delaware corporation, and
its permitted successors and assigns.
"Owner Participant" means Original Owner Participant and each
Subsequent Owner Participant to the extent that the same shall, at the relevant
time, have an Ownership Interest.
"Ownership Interest" means, in the case of each Owner Participant,
the percentage of its undivided beneficial interest in the Trust Estate created
by this Trust Agreement, which percentage shall be 100%.
"Subsequent Owner Participant" means any corporation to which
Original Owner Participant or any transferee from Original Owner Participant or
any Subsequent Owner Participant shall have transferred at any time after the
Delivery Date all of the undivided right, title and interest originally held by
Original Owner Participant in this Trust Agreement, the Trust Estate and the
Participation Agreement, to the extent permitted by Section 8.01 of this Trust
Agreement and Section 5.02 of the Participation Agreement, provided that any
such transfer: (i) shall be effected by a written agreement, in form and
substance reasonably satisfactory to Owner Trustee in its individual capacity,
among such transferee, its transferor and Owner Trustee, which shall provide
that such transferee thereby becomes a party to, and beneficiary of, this Trust
Agreement and an Owner Participant for all purposes hereof and that such
transferee assumes all of the obligations of its transferor under this Trust
Agreement; and (ii) so long as the Lease shall be in effect or any Equipment
Notes remain unpaid, such transferee and its transferor shall have complied with
all of the terms of Section 5.02(i) of the Participation Agreement.
"Trust Estate" means all estate, right, title and interest of Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase
Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill
of Sale, including, without limitation, all amounts of Basic Rent and
Supplemental Rent including without limitation insurance proceeds (other than
insurance proceeds payable to or for the benefit of Owner Trustee, for its own
account or in its individual capacity, Owner Participant, Noteholders or Loan
Trustee) and requisition, indemnity or other payments of any kind for or with
respect to the Aircraft (except amounts owing to Owner Participant, to Loan
Trustee, to Owner Trustee, in its individual capacity, or to Noteholders or any
other holder of an Equipment Note, or to any of their respective directors,
officers, employees, servants and agents, pursuant to Section 4.02 or 4.03 of
the Participation Agreement). Notwithstanding the foregoing, "Trust Estate"
shall not include any Excluded Payments.
"Trust Office" shall mean the principal corporate trust office of
Owner Trustee at MAC: U1254-031, 79 South Main Street, Salt Lake City, Utah
84111, Attention: Corporate Trust Department, or the principal corporate trust
office of any successor Owner Trustee.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.01. Authority to Execute Documents. Owner Participant
hereby authorizes and directs Owner Trustee to execute and deliver the Operative
Documents and any other agreements, instruments or documents to which Owner
Trustee is a party in the respective forms thereof in which delivered from time
to time by Owner Participant to Owner Trustee for execution and delivery and,
subject to the terms hereof, to perform its duties and, upon instructions from
Owner Participant, exercise its rights under said Operative Documents in
accordance with the terms thereof.
SECTION 2.02. Declaration of Trust. Owner Trustee hereby declares
that it will hold the Trust Estate upon the trusts hereinafter set forth for the
use and benefit of Owner Participant, subject, however, to the provisions of and
the Lien created by the Indenture and to the provisions of the Lease. The name
of the trust created hereby shall be "(N____ 200_ Trust)" and such name may (but
need not) be used in any correspondence and filings made by Owner Trustee in
connection with the trust created hereby.
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT;
ISSUANCE OF EQUIPMENT NOTES
SECTION 3.01. Acceptance of Aircraft. Original Owner Participant
hereby authorizes and directs Owner Trustee to, and Owner Trustee agrees for the
benefit of Owner Participant that it will, on the Delivery Date, subject to due
compliance with the terms of Section 3.02 hereof:
(a) purchase the Aircraft pursuant to the Participation Agreement
and the Bill of Sale;
(b) accept from Lessee the delivery of the Bill of Sale and the FAA
Bill of Sale;
(c) cause the Aircraft to be leased to Lessee under the Lease, and
in furtherance thereof execute and deliver a Lease Supplement covering the
Aircraft;
(d) execute and deliver the Amended and Restated Indenture and the
Indenture Supplement covering the Aircraft;
(e) issue to Subordination Agent (on behalf of Pass Through
Trustees) Assumed Equipment Notes in the amounts and otherwise as provided
in Section 2.01 of the Participation Agreement;
(f) execute and deliver the financing statements referred to in
Section 3.01(e) of the Participation Agreement, together with all other
agreements, documents and instruments referred to in Section 3.01 of the
Participation Agreement to which Owner Trustee is a party; and
(g) effect the registration of the Aircraft in the name of Owner
Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of
Sale; (ii) an application for registration of the Aircraft in the name of
Owner Trustee (including without limitation an affidavit from Owner
Trustee in compliance with the provisions of 14 C.F.R. ss. 47.7(c)(2)(ii)
(1979)); and (iii) the Trust Agreement.
SECTION 3.02. Conditions Precedent. The right and obligation of
Owner Trustee to take the action required by Section 3.01 hereof with respect to
the Aircraft shall be subject to the following conditions precedent:
(a) Original Owner Participant shall have made the full amount of
its Commitment set forth in Schedule I to the Participation Agreement
available to Owner Trustee, in immediately available funds, in accordance
with Section 2.02 of the Participation Agreement; and
(b) the terms and conditions of Section 3.01 of the Participation
Agreement, insofar as they relate to the Aircraft, shall have been
complied with in a manner satisfactory to Original Owner Participant and
Owner Trustee.
SECTION 3.03. Authorization in Respect of a Termination of the Lease
and Assumption of the Equipment Notes. Owner Participant hereby authorizes and
directs Owner Trustee to, and Owner Trustee agrees for the benefit of Owner
Participant that it will, take the actions specified to be taken by Owner
Trustee in Section 6.01(k) of the Participation Agreement upon Lessee's
purchasing the Aircraft pursuant to Section 19(d) of the Lease and upon Lessee's
assuming the indebtedness evidenced by the Equipment Notes in accordance with
the provisions of such Section 6.01(k).
SECTION 3.04. Authorization in Respect of a Replacement Airframe or
Replacement Engines. Owner Participant hereby authorizes and directs Owner
Trustee to, and Owner Trustee agrees for the benefit of Owner Participant that
it will, in the event of a Replacement Airframe and Replacement Engines, if any,
being substituted pursuant to Section 10(a) of the Lease, or a Replacement
Engine being substituted pursuant to Section 10(b) of the Lease, subject to due
compliance with the terms of Section 10(a) or 10(b) of the Lease, as the case
may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or representatives of Owner
Trustee (who shall be an employee or employees of Lessee) to accept
delivery of the Replacement Airframe and Replacement Engines, if any, or
the Replacement Engines;
(b) accept from Lessee or other vendor of the Replacement Airframe
and Replacement Engines, if any, or the Replacement Engine a bill of sale
or bills of sale (if tendered), and the invoice, if any, with respect to
the Replacement Airframe and Replacement Engines, if any, or the
Replacement Engine being furnished pursuant to Section 10(a) or (b) of the
Lease;
(c) in the case of a Replacement Airframe, make application to the
FAA for the registration in the name of Owner Trustee of the Aircraft of
which such Replacement Airframe is a part;
(d) execute and deliver a Lease Supplement and an Indenture
Supplement covering (i) the Aircraft of which such Replacement Airframe is
part or (ii) such Replacement Engine, as the case may be;
(e) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of Lessor
Liens) and to the Airframe and Engines (if any) or the Engine being
replaced to Lessee;
(f) request in writing that Loan Trustee execute and deliver to
Lessee appropriate instruments to release the Airframe and Engines or
engines (if any) or the Engine or engine being replaced from the Lien
created under the Indenture and release the Purchase Agreement and the
Purchase Agreement Assignment (solely with respect to such replaced
Airframe and Engines, if any, or Engine) from the assignment and pledge
under the Indenture; and
(g) upon instructions from Owner Participant, take such further
action as may be contemplated by clauses (B) and (C) of the fourth
paragraph of Section 10(a) of the Lease, the sixth paragraph of Section
10(a) of the Lease, clauses (ii) and (iii) of the second sentence of
Section 10(b) of the Lease or and the penultimate sentence of Section
10(b) of the Lease, as the case may be.
SECTION 3.05. Trust Agreement Remaining in Full Force and Effect. In
the event of the substitution of a Replacement Airframe for the Airframe or the
substitution of a Replacement Engine for any Engine or engine, all provisions of
this Trust Agreement relating to such replaced Airframe or Engine or engine
shall be applicable to such Replacement Airframe or Replacement Engine with the
same force and effect as if such Replacement Airframe or Replacement Engine were
the same airframe or engine as the Airframe or Engine being replaced but for the
Event of Loss with respect to such Airframe or Engine.
SECTION 3.06. Authorization in Respect of a Return of an Engine.
Owner Participant hereby authorizes and directs Owner Trustee to, and Owner
Trustee agrees for the benefit of Owner Participant that it will, in the event
of an engine being transferred to Owner Trustee pursuant to Section 5(b) of the
Lease, subject to due compliance with the terms of such Section 5(b):
(a) accept from Lessee the bill of sale with respect to such engine
contemplated by such Section 5(b) (if tendered);
(b) transfer its interest in (without recourse except as to
obligations in respect of Lessor Liens, including for this purpose Liens
that would be Lessor Liens but for the proviso in the definition of Lessor
Liens) and to an Engine to Lessee as contemplated by such Section 5(b);
and
(c) request in writing that Loan Trustee execute and deliver to
Lessee appropriate instruments to release the Engine being transferred to
Lessee pursuant to such Section 5(b) from the Lien of the Indenture and to
release the Purchase Agreement and the Purchase Agreement Assignment
(solely with respect to such Engine) from the assignment and pledge under
the Indenture.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 4.01. Distribution of Payments. (a) Payments to Loan
Trustee. Until the Indenture shall have been discharged pursuant to Section
10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and
requisition or other payments of any kind included in the Trust Estate (other
than Excluded Payments) payable to Owner Trustee shall be payable directly to
Loan Trustee (and if any of the same are received by Owner Trustee shall upon
receipt be paid over to Loan Trustee without deduction, set-off or adjustment of
any kind) for distribution in accordance with the provisions of Article III of
the Indenture.
(b) Payments to Owner Trustee; Other Parties. After the Indenture
shall have been discharged pursuant to Section 10.01 thereof, any payment of the
type referred to in Section 4.01(a) hereof (other than Excluded Payments)
received by Owner Trustee, any payments received from Loan Trustee other than as
specified in Section 4.01(d) hereof and any other amount received as part of the
Trust Estate and for the application or distribution of which no provision is
made herein, shall be distributed forthwith upon receipt by Owner Trustee in the
following order of priority: first, so much of such payment as shall be required
to reimburse Owner Trustee for any expenses not otherwise reimbursed as to which
Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof
shall be retained by Owner Trustee; second, so much of the remainder for which
provision as to the application thereof is contained in the Lease or any of the
other Operative Documents shall be applied and distributed in accordance with
the terms of the Lease or such other Operative Document; and third, the balance,
if any, shall be paid to Owner Participant.
(c) Certain Distributions to Owner Participant. All amounts from
time to time distributable by Loan Trustee to Owner Participant pursuant to the
Indenture shall, if paid to Owner Trustee, be distributed by Owner Trustee to
Owner Participant in accordance with the provisions of Article III of the
Indenture.
(d) Excluded Payments. Any Excluded Payments received by Owner
Trustee shall be paid by Owner Trustee to the Person to whom such Excluded
Payments are payable under the provisions of the Participation Agreement, the
Tax Indemnity Agreement or the Lease.
SECTION 4.02. Method of Payments. Owner Trustee shall make
distributions or cause distributions to be made to Owner Participant pursuant to
this Article IV by transferring by wire transfer the amount to be distributed to
such account or accounts of Owner Participant as Owner Participant may designate
from time to time in writing to Owner Trustee. Notwithstanding the foregoing,
Owner Trustee will, if so requested by Owner Participant in writing, pay any or
all amounts payable to Owner Participant pursuant to this Article IV either (i)
by crediting such amount or amounts to an account or accounts maintained by
Owner Participant with Owner Trustee in its individual capacity in immediately
available funds, (ii) by payment at the Trust Office of Owner Trustee, in
immediately available funds, or (iii) by mailing an official bank check or
checks in such amount or amounts payable to Owner Participant at such address as
Owner Participant shall have designated in writing to Owner Trustee.
ARTICLE V
DUTIES OF OWNER TRUSTEE
SECTION 5.01. Notice of Event of Default. If Owner Trustee shall
have knowledge of a Lease Event of Default or an Indenture Event of Default (or
an event which with the passage of time or the giving of notice or both would
constitute a Lease Event of Default or an Indenture Event of Default) Owner
Trustee shall give to Owner Participant prompt telephonic or telecopy notice
thereof followed by prompt confirmation thereof by certified mail, postage
prepaid, provided that (i) in the case of an event which with the passage of
time would constitute an Indenture Event of Default referred to in paragraph (c)
of Section 4.02 of the Indenture, such notice shall in no event be furnished
later than ten (10) days after Owner Trustee shall first have knowledge of such
event and (ii) in the case of a misrepresentation by Owner Trustee which with
the passage of time would constitute an Indenture Event of Default referred to
in paragraph (d) of Section 4.02 of the Indenture, such notice shall in no event
be furnished later than ten (10) days after Owner Trustee shall first have
knowledge of such event. Subject to the terms of Section 5.03 hereof, Owner
Trustee shall take such action or shall refrain from taking such action, not
inconsistent with the provisions of the Indenture, with respect to such Lease
Event of Default, Indenture Event of Default or other event as Owner Trustee
shall be directed in writing by Owner Participant. If Owner Trustee shall not
have received instructions as above provided within twenty (20) days after the
mailing of such notice to Owner Participant, Owner Trustee until instructed
otherwise in accordance with the preceding sentence may, but shall be under no
duty to, take or refrain from taking such action with respect to such Lease
Event of Default, Indenture Event of Default or other event, not inconsistent
with the provisions of the Indenture, as it shall deem advisable in the best
interests of Owner Participant. For all purposes of this Trust Agreement, the
Lease and the other Operative Documents, in the absence of actual knowledge by
an officer of Wells Fargo in the Corporate Trust Department, Owner Trustee shall
not be deemed to have knowledge of a Lease Event of Default, an Indenture Event
of Default or other event referred to in this Section 5.01 unless notified in
writing by Loan Trustee, Owner Participant or Lessee.
SECTION 5.02. Action Upon Instructions. Subject to the terms of
Sections 5.01 and 5.03 hereof, upon the written instructions at any time and
from time to time of Owner Participant, Owner Trustee will take such of the
following actions, not inconsistent with the provisions of the Indenture, as may
be specified in such instructions: (i) give such notice or direction or exercise
such right, remedy or power hereunder or under any of the Operative Documents to
which Owner Trustee is a party or in respect of all or any part of the Trust
Estate as shall be specified in such instructions (including entering into
agreements referred to in clause (i) of the definition of "Subsequent Owner
Participant"); (ii) take such action to preserve or protect the Trust Estate
(including the discharge of Liens) as may be specified in such instructions;
(iii) approve as satisfactory to it all matters required by the terms of the
Lease or the other Operative Documents to be satisfactory to Owner Trustee, it
being understood that without written instructions of Owner Participant, Owner
Trustee shall not approve any such matter as satisfactory to it (it being
understood that the provisions of Sections 3.03, 3.04 and 3.06 hereof do not
constitute instructions by Owner Participant for Owner Trustee to approve of or
consent to the matters to be approved of or consented to by Owner Trustee in the
sections of the Lease referred to in Sections 3.03, 3.04 or 3.06 hereof); and
(iv) subject to the rights of Lessee under the Operative Documents, after the
expiration or earlier termination of the Lease, deliver the Aircraft to Owner
Participant in accordance with such instructions, convey all of Owner Trustee's
right, title and interest in and to the Aircraft for such amount, on such terms
and to such purchaser or purchasers as shall be designated in such instructions,
or net lease the Aircraft on such terms and to such lessee or lessees as shall
be designated in such instructions.
SECTION 5.03. Indemnification. Owner Trustee shall not be required
to take any action under Section 5.01 (other than the giving of the notices
referred to therein) or 5.02 hereof unless Owner Trustee shall have been
indemnified by Owner Participant, in manner and form satisfactory to Owner
Trustee, against any liability, cost or expense (including reasonable counsel
fees and disbursements) which may be incurred in connection therewith; and, if
Owner Participant shall have directed Owner Trustee to take any such action or
refrain from taking any action, Owner Participant agrees to furnish such
indemnity as shall be required and, in addition, to the extent not otherwise
paid pursuant to the provisions of the Lease or the Participation Agreement, to
pay the reasonable compensation of Owner Trustee for the services performed or
to be performed by it pursuant to such direction and any fees and disbursements
of counsel or agents employed by Owner Trustee in connection therewith. Owner
Trustee shall not be required to take any action under Section 5.01 or 5.02
hereof if Owner Trustee shall reasonably determine, or shall have been advised
by counsel, that such action is contrary to the terms of any of the Operative
Documents to which Owner Trustee is a party, or is otherwise contrary to law.
SECTION 5.04. No Duties Except as Specified in Trust Agreement or
Instructions. Owner Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with the Aircraft or any other
part of the Trust Estate, or to otherwise take or refrain from taking any action
under, or in connection with any of the Operative Documents to which Owner
Trustee is a party, except as expressly required by the terms of any of the
Operative Documents to which Owner Trustee is a party, or (to the extent not
inconsistent with the provisions of the Indenture) as expressly provided by the
terms hereof or in written instructions from Owner Participant received pursuant
to the terms of Section 5.01 or 5.02, and no implied duties or obligations shall
be read into this Trust Agreement against Owner Trustee. Wells Fargo agrees that
it will, in its individual capacity and at its own cost or expense (but without
any right of indemnity in respect of any such cost or expense under Section 7.01
hereof) promptly take such action as may be necessary to duly discharge and
satisfy in full all Lessor Liens which it is required to discharge pursuant to
Section 6.01(g) of the Participation Agreement and otherwise comply with the
terms of said Section binding on it.
SECTION 5.05. Satisfaction of Conditions Precedent. Anything herein
to the contrary notwithstanding, Owner Trustee shall comply with the provisions
of Section 3.01 hereof upon the satisfaction, to the satisfaction of special
counsel for Owner Trustee, of all the applicable conditions precedent specified
in Section 3.02 hereof and in Section 3.01 of the Participation Agreement.
SECTION 5.06. No Action Except Under Specified Documents or
Instructions. Owner Trustee shall not have any power, right or authority to, and
Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or
otherwise deal with the Aircraft or any other part of the Trust Estate except
(i) as expressly required by the terms of any of the Operative Documents to
which Owner Trustee is a party, (ii) as expressly provided by the terms hereof,
or (iii) as expressly provided in written instructions from Owner Participant
pursuant to Section 5.01 or 5.02 hereof.
ARTICLE VI
OWNER TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties. Wells Fargo accepts
the trusts hereby created and agrees to perform the same but only upon the terms
hereof applicable to it. Owner Trustee also agrees to receive and disburse all
monies received by it constituting part of the Trust Estate upon the terms
hereof. Wells Fargo shall not be answerable or accountable under any
circumstances, except (a) for its own willful misconduct or negligence, (b) for
performance of the terms of the last sentence of Section 5.04 hereof, (c) for
its or Owner Trustee's failure to use ordinary care to disburse funds and (d)
for liabilities that may result from the inaccuracy of any representation or
warranty of it (or from the failure by it to perform any covenant) in Section
6.03 hereof, in Section 6.03 of the Indenture, in Section 4 of the Lease or in
Section 5.03 and 6.01(e) of the Participation Agreement.
SECTION 6.02. Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Section 5.02 hereof and except as
provided in, and without limiting the generality of, Section 5.04 hereof and the
last sentence of Section 9.01(b) hereof, neither Owner Trustee nor Wells Fargo
shall have any duty (i) to see to any recording or filing of any Operative
Document or of any supplement to any thereof or to see to the maintenance of any
such recording or filing or any other filing of reports with the FAA or other
governmental agencies, except that Wells Fargo, in its individual capacity,
shall comply with the reporting requirements set forth in 14 C.F.R. ss. 47.45 or
any successor provision and Owner Trustee shall, to the extent that information
for that purpose is supplied by Lessee pursuant to any of the Operative
Documents, complete and timely submit (and furnish Owner Participant with a copy
of) any and all reports relating to the Aircraft which may from time to time be
required by the FAA or any government or governmental authority having
jurisdiction, or (ii) to see to any insurance on the Aircraft or to effect or
maintain any such insurance, whether or not Lessee shall be in default with
respect thereto, other than to forward to Owner Participant copies of all
reports and other written information which Owner Trustee receives from Lessee
pursuant to Section 11(e) of the Lease, or (iii) to see to the payment or
discharge of any tax, assessment or other governmental charge or any lien or
encumbrance of any kind owing with respect to, assessed or levied against any
part of the Indenture Estate or the Trust Estate, except as provided in Section
6.01(g) of the Participation Agreement, or (iv) to inspect Lessee's books and
records with respect to the Aircraft at any time permitted pursuant to the
Lease. Notwithstanding the foregoing, Owner Trustee will furnish to Loan Trustee
and Owner Participant, promptly upon receipt thereof, duplicates or copies of
all reports, notices, requests, demands, certificates, financial statements and
other instruments furnished to Owner Trustee under the Lease or any other
Operative Document.
SECTION 6.03. No Representations or Warranties as to Certain
Matters. NEITHER OWNER TRUSTEE NOR WELLS FARGO MAKES OR SHALL BE DEEMED TO HAVE
MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE
AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH
RESPECT TO THE AIRCRAFT WHATSOEVER, except that Wells Fargo in its individual
capacity warrants that on the Delivery Date Owner Trustee shall have received
whatever title was conveyed to it by Lessee and that the Aircraft shall during
the Term be free of Lessor Liens attributable to it, or (b) any representation
or warranty as to the validity, legality or enforceability of this Trust
Agreement or any Operative Document to which Owner Trustee is a party, or any
other document or instrument, or as to the correctness of any statement
contained in any thereof except to the extent that any such statement is
expressly made herein or therein as a representation by Wells Fargo in its
individual capacity or by Owner Trustee and except that Wells Fargo in its
individual capacity hereby represents and warrants that this Trust Agreement has
been, and (assuming due authorization, execution and delivery by Original Owner
Participant of this Trust Agreement) the Operative Documents to which it or
Owner Trustee is a party have been (or at the time of execution and delivery of
any such instrument by it or Owner Trustee hereunder or pursuant to the terms of
the Participation Agreement that such an instrument will be) duly executed and
delivered by one of its officers who is or will be, as the case may be, duly
authorized to execute and deliver such instruments on behalf of itself or Owner
Trustee, as the case may be.
SECTION 6.04. No Segregation of Monies Required; No Interest. Except
as provided in Section 22 of the Lease, monies received by Owner Trustee
hereunder need not be segregated in any manner except to the extent required by
law, and may be deposited under such general conditions as may be prescribed by
law, and Owner Trustee shall not be liable for any interest thereon.
SECTION 6.05. Reliance Upon Certificates, Counsel and Agents. Owner
Trustee shall incur no liability to anyone in acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Unless other evidence in respect thereof is specifically prescribed
herein, any request, direction, order or demand of Owner Participant or Lessee
mentioned herein or in any of the Operative Documents to which Owner Trustee is
a party shall be sufficiently evidenced by written instruments signed by a
person purporting to be the chairman of the board, the president, any executive
vice president, any senior vice president or any vice president or a managing
director and in the name of Owner Participant or Lessee, as the case may be.
Owner Trustee may accept a copy of a resolution of the Board of Directors or
Executive Committee of Lessee, certified by the secretary or any assistant
secretary of Lessee as duly adopted and in full force and effect, as conclusive
evidence that such resolution has been duly adopted by said Board or Committee
and that the same is in full force and effect. As to any fact or matter the
manner of ascertainment of which is not specifically described herein, Owner
Trustee may for all purposes hereof rely on a certificate signed by a person
purporting to be the chairman of the board, the president, any executive vice
president, any senior vice president or any vice president or a managing
director of Lessee, as to such fact or matter, and such certificate shall
constitute full protection to Owner Trustee for any action taken or omitted to
be taken by it in good faith in reliance thereon. In the administration of
trusts hereunder, Owner Trustee may execute any of the trusts or powers hereof
and perform its powers and duties hereunder directly or through agents or
attorneys and may, at the expense of the Trust Estate, consult with counsel,
accountants and other skilled persons to be selected and employed by it. Owner
Trustee shall not be liable for anything done, suffered or omitted in good faith
by it in accordance with the advice or opinion of any such counsel, accountants
or other skilled persons and Owner Trustee shall not be liable for the
negligence of any such agent, attorney, counsel, accountant or other skilled
person appointed by it with due care hereunder.
SECTION 6.06. Not Acting in Individual Capacity. In acting
hereunder, Owner Trustee acts solely as trustee and not in its individual
capacity except as otherwise expressly provided herein; and, subject to the
terms of the Participation Agreement and the Indenture, all persons, other than
Owner Participant, as provided herein, having any claim against Owner Trustee by
reason of the transactions contemplated hereby shall look only to the Trust
Estate for payment or satisfaction thereof.
SECTION 6.07. Fees; Compensation. Except as provided in Section 5.03
or 7.01 hereof and Article 12 of the Participation Agreement, Owner Trustee
agrees that it shall have no right against Owner Participant or (subject to the
provisions of the Indenture) the Trust Estate for any fee as compensation for
its services hereunder; provided, however, that Owner Trustee shall have a Lien
upon the Trust Estate (subject, however, to the Lien of the Indenture) for any
such fee not paid by Lessee as contemplated by the last sentence of Section
4.03(c) of the Participation Agreement.
SECTION 6.08. Tax Returns. Owner Trustee shall be responsible for
the keeping of all appropriate books and records relating to the receipt and
disbursement of all monies under this Trust Agreement or any agreement
contemplated hereby. Owner Participant shall be responsible for causing to be
prepared and filed all income tax returns required to be filed by Owner
Participant. Owner Trustee shall be responsible for causing to be prepared, at
the request and expense of Owner Participant, all income tax returns required to
be filed with respect to the trust created hereby and shall execute and file
such returns. Owner Participant or Owner Trustee, as the case may be, upon
request, will furnish Owner Trustee or Owner Participant, as the case may be,
with all such information as may be reasonably required from Owner Participant
or Owner Trustee, as the case may be, in connection with the preparation of such
income tax returns.
ARTICLE VII
INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT
SECTION 7.01. Owner Participant to Indemnify Owner Trustee. Owner
Participant hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and hereby indemnify,
protect, save and keep harmless Wells Fargo in its individual capacity and its
successors, assigns, legal representatives, agents and servants, from and
against any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by Wells Fargo in its individual capacity on or
measured by any compensation received by Wells Fargo in its individual capacity
for its services hereunder or in connection with the transactions contemplated
by the Operative Documents), claims, actions, suits, costs, expenses or
disbursements (including, without limitation, reasonable ongoing fees of Owner
Trustee, reasonable legal fees and expenses, and including without limitation
any liability of an owner, any strict liability and any liability without fault)
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against Wells Fargo in its individual capacity (whether or not also
indemnified against by Lessee under the Lease or under the Participation
Agreement or also indemnified against by any other person but only to the extent
not otherwise paid or reimbursed by Lessee or such other Person) in any way
relating to or arising out of this Trust Agreement or any of the Operative
Documents or the enforcement of any of the terms of any thereof, or in any way
relating to or arising out of the manufacture, purchase, acceptance,
nonacceptance, rejection, ownership, delivery, lease, possession, use,
operation, condition, sale, return or other disposition of the Aircraft
(including, without limitation, latent and other defects, whether or not
discoverable, and any claim for patent, trademark or copyright infringement), or
in any way relating to or arising out of the administration of the Trust Estate
or the action or inaction of Owner Trustee or Wells Fargo in its individual
capacity hereunder, except (a) in the case of willful misconduct or negligence
on the part of Owner Trustee or Wells Fargo in its individual capacity in the
performance or non-performance of its duties hereunder or (b) those resulting
from the inaccuracy of any representation or warranty of Wells Fargo in its
individual capacity (or from the failure of Wells Fargo in its individual
capacity to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the
Indenture or, with respect to representations or warranties of Wells Fargo in
its individual capacity only, in Section 4 of the Lease, in Section 5.03 or
Section 6.01(e) of the Participation Agreement or in any of the other Operative
Documents or (c) as may result from a breach by Wells Fargo in its individual
capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in
the case of the failure to use ordinary care on the part of Owner Trustee or
Wells Fargo in its individual capacity in the disbursement of funds. The
indemnities contained in this Section 7.01 extend to Wells Fargo only in its
individual capacity and shall not be construed as indemnities of the Indenture
Estate or the Trust Estate (except to the extent, if any, that Wells Fargo in
its individual capacity has been reimbursed by the Indenture Estate or the Trust
Estate for amounts covered by the indemnities contained in this Section 7.01).
The indemnities contained in this Section 7.01 shall survive the termination of
this Trust Agreement. In addition, if necessary, Wells Fargo in its individual
capacity shall be entitled to indemnification from the Trust Estate, subject to
the Lien of the Indenture, for any liability, obligation, loss, damage, penalty,
tax, claim, action, suit, cost, expense or disbursement indemnified against
pursuant to this Section 7.01 to the extent not reimbursed by Lessee, Owner
Participant or others, but without releasing any of them from their respective
agreements of reimbursement; and to secure the same Wells Fargo in its
individual capacity shall have a Lien on the Trust Estate, subject to the Lien
of the Indenture, which shall be prior to any interest therein of Owner
Participant. The payor of any indemnity under this Article VII shall be
subrogated to any right of the person indemnified in respect of the matter as to
which such indemnity was paid.
ARTICLE VIII
TRANSFER OF OWNER PARTICIPANT'S INTEREST
SECTION 8.01. Transfer of Interests. All provisions of Section
6.01(n) of the Participation Agreement shall (with the same force and effect as
if set forth in full, mutatis mutandis, in this Section 8.01) be applicable to
any assignment, conveyance or other transfer by any Owner Participant of its
right, title or interest in and to the Participation Agreement, the Trust Estate
or this Trust Agreement.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES
SECTION 9.01. Resignation of Owner Trustee; Appointment of
Successor. (a) Resignation or Removal. Owner Trustee or any successor Owner
Trustee (i) shall resign if required to do so pursuant to Section 6.01(e) of the
Participation Agreement and (ii) may resign at any time without cause by giving
at least sixty (60) days' prior written notice to Owner Participant, Loan
Trustee (so long as the Lien of the Indenture has not been fully discharged) and
Lessee (so long as the Lease is in effect), such resignation to be effective
upon the acceptance of appointment by the successor Owner Trustee under Section
9.01(b) hereof. In addition, Owner Participant may at any time remove Owner
Trustee without cause by a notice in writing delivered to Owner Trustee, Loan
Trustee (so long as the Lien of the Indenture has not been fully discharged) and
Lessee (so long as the Lease is in effect), such removal to be effective upon
the acceptance of appointment by the successor Owner Trustee under Section
9.01(b) hereof. In the case of the resignation or removal of Owner Trustee,
Owner Participant shall appoint a successor Owner Trustee by an instrument
signed by Owner Participant. If a successor Owner Trustee shall not have been
appointed within thirty (30) days after such notice of resignation or removal,
Owner Trustee, Owner Participant, Lessee or Loan Trustee may apply to any court
of competent jurisdiction to appoint a successor Owner Trustee to act until such
time, if any, as a successor shall have been appointed as above provided. Any
successor Owner Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Owner Trustee appointed as above
provided.
(b) Execution and Delivery of Documents, etc. Any successor Owner
Trustee, however appointed, shall execute and deliver to the predecessor Owner
Trustee and Owner Participant an instrument accepting such appointment, and
thereupon such successor Owner Trustee, without further act, shall become vested
with all the estates, properties, rights, powers, duties and trusts of the
predecessor Owner Trustee in the trusts hereunder with like effect as if
originally named Owner Trustee herein; but nevertheless, upon the written
request of such successor Owner Trustee, such predecessor Owner Trustee shall
execute and deliver an instrument transferring to such successor Owner Trustee,
upon the trusts herein expressed, all the estates, properties, rights, powers
and trusts of such predecessor Owner Trustee, and such predecessor Owner Trustee
shall duly assign, transfer, deliver and pay over to such successor Owner
Trustee all monies or other property then held by such predecessor Owner Trustee
upon the trusts herein expressed. Upon the appointment of any successor Owner
Trustee hereunder, the predecessor Owner Trustee will execute such documents as
are provided to it by such successor Owner Trustee and will take such further
actions as are requested of it by such successor Owner Trustee as are reasonably
required to cause registration of the Aircraft included in the Trust Estate to
be transferred upon the records of the FAA, or other governmental authority
having jurisdiction, into the name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however appointed,
shall be a Citizen of the United States without making use of a voting trust,
voting powers agreement or similar arrangement and shall also be a bank or trust
company organized under the laws of the United States or any state thereof
having a combined capital and surplus of at least $100,000,000, if there be such
an institution willing, able and legally qualified to perform the duties of
Owner Trustee hereunder upon reasonable or customary terms.
(d) Merger, etc. Any corporation into which Owner Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which Owner Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of Owner Trustee may be transferred, shall, subject to the terms
of Section 9.01(c) hereof, be Owner Trustee hereunder without further act.
SECTION 9.02. Co-Trustees and Separate Trustees. If at any time it
shall be necessary or prudent in order to conform to any law of any jurisdiction
in which all or any part of the Trust Estate is located, or Owner Trustee being
advised by counsel shall determine that it is so necessary or prudent in the
interest of Owner Participant or Owner Trustee, or Owner Trustee shall have been
directed to do so by Owner Participant, Owner Trustee and Owner Participant
shall execute and deliver an agreement supplemental hereto and all other
instruments and agreements necessary or proper to constitute another bank or
trust company or one or more persons (any and all of which shall be a Citizen of
the United States without making use of a voting trust, voting powers agreement
or similar arrangement) approved by Owner Trustee and Owner Participant, either
to act as co-trustee, jointly with Owner Trustee, or to act as separate trustee
hereunder (any such co-trustee or separate trustee being herein sometimes
referred to as an "additional trustee"). In the event an Indenture Event of
Default not arising from a Lease Event of Default shall occur and be continuing,
Owner Trustee may act under the foregoing provisions of this Section 9.02
without the concurrence of Owner Participant; and Owner Participant hereby
appoints Owner Trustee its agent and attorney-in-fact to act for it under the
foregoing provisions of this Section 9.02 in such contingency.
Every additional trustee hereunder shall, to the extent permitted by
law, be appointed and act, and Owner Trustee and its successors shall act,
subject to the following provisions and conditions:
(A) all powers, duties, obligations and rights conferred upon Owner
Trustee in respect of the custody, control and management of monies, the
Aircraft or documents authorized to be delivered hereunder or under the
Participation Agreement shall be exercised solely by Owner Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon Owner Trustee shall be conferred or imposed upon and
exercised or performed by Owner Trustee and such additional trustee
jointly, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (including the
holding of title to the Trust Estate) Owner Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
additional trustee;
(C) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised hereunder by
such additional trustee, except jointly with, or with the consent in
writing of, Owner Trustee;
(D) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
(E) Owner Participant, at any time, by an instrument in writing may
remove any such additional trustee unless such additional trustee was
appointed by Owner Trustee without the concurrence of Owner Participant
during the occurrence of an Indenture Event of Default not arising from a
Lease Event of Default, in which case Owner Trustee shall have the power
to remove any such additional trustee without the concurrence of Owner
Participant; and Owner Participant hereby appoints Owner Trustee its agent
and attorney-in-fact for it in such connection in such contingency; and
(F) no appointment of, or action by, any additional trustee will
relieve Owner Trustee of any of its obligations under, or otherwise affect
any of the terms of, the Indenture or affect the interests of Loan Trustee
or the holders of the Equipment Notes in the Indenture Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
TO TRUST AGREEMENT AND OTHER DOCUMENTS
SECTION 10.01. Supplements and Amendments. (a) Supplements and
Amendments. This Trust Agreement may not be amended, supplemented or otherwise
modified except by an instrument in writing signed by Owner Trustee and Owner
Participant. Subject to Section 10.02 hereof and the first sentence of Section
6.01(m) of the Participation Agreement, Owner Trustee will execute any
amendment, supplement or other modification of this Trust Agreement or of any
other Operative Document to which Owner Trustee is a party which it is requested
to execute by Owner Participant, except that Owner Trustee shall not execute any
such amendment, supplement or other modification which, by the express
provisions of any of the above documents, requires the consent of any other
party unless such consent shall have been obtained.
(b) Delivery of Amendments and Supplements to Certain Parties. A
signed copy of each amendment or supplement referred to in Section 10.01(a)
hereof shall be delivered by Owner Trustee to Loan Trustee and each holder of an
Equipment Note.
SECTION 10.02. Discretion as to Execution of Documents. Prior to
executing any document required to be executed by it pursuant to the terms of
Section 10.01 hereof, Owner Trustee shall be entitled to receive an opinion of
its counsel to the effect that the execution of such document is authorized
hereunder. If in the opinion of Owner Trustee any such document adversely
affects any right, duty, immunity or indemnity in favor of Owner Trustee
hereunder or under any other Operative Document to which Owner Trustee is a
party, Owner Trustee may in its discretion decline to execute such document.
SECTION 10.03. Absence of Requirements as to Form. It shall not be
necessary for any written request furnished pursuant to Section 10.01 hereof to
specify the particular form of the proposed documents to be executed pursuant to
such Section, but it shall be sufficient if such request shall indicate the
substance thereof.
SECTION 10.04. Distribution of Documents. Promptly after the
execution by Owner Trustee of any document entered into pursuant to Section
10.01 hereof, Owner Trustee shall mail, by certified mail, postage prepaid, a
conformed copy thereof to Owner Participant, but the failure of Owner Trustee to
mail such conformed copy shall not impair or affect the validity of such
document.
SECTION 10.05. No Request Needed as to Lease Supplement and
Indenture Supplement. No written request pursuant to Section 10.01 hereof shall
be required to enable Owner Trustee to enter into the Lease Supplement covering
the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01
hereof and the Indenture Supplement pursuant to the terms of the Indenture and
Section 3.01 hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Trust Agreement. This Trust Agreement
and the trusts created hereby shall be of no further force or effect upon the
earlier of (a) both the final discharge of the Indenture pursuant to Section
10.01 thereof and the sale or other final disposition by Owner Trustee of all
property constituting part of the Trust Estate and the final distribution by
Owner Trustee of all monies or other property or proceeds constituting part of
the Trust Estate in accordance with Article IV hereof, provided that at such
time Lessee shall have fully complied with all of the terms of the Lease and the
Participation Agreement or (b) twenty-one years less one day after the death of
the last survivor of all of the descendants of the grandparents of David
Rockefeller living on the date of the earliest execution of this Trust Agreement
by any party hereto; otherwise this Trust Agreement and the trusts created
hereby shall continue in full force and effect in accordance with the terms
hereof.
SECTION 11.02. Owner Participant Has No Legal Title in Trust Estate.
Owner Participant shall not have legal title to any part of the Trust Estate. No
transfer, by operation of law or otherwise, of any right, title and interest of
Owner Participant in and to the Trust Estate hereunder shall operate to
terminate this Trust Agreement or the trusts hereunder or entitle any successors
or transferees of Owner Participant to an accounting or to the transfer of legal
title to any part of the Trust Estate.
SECTION 11.03. Assignment, Sale, etc. of Aircraft. Any assignment,
sale, transfer or other conveyance of its interest in the Aircraft by Owner
Trustee made pursuant to the terms hereof or of the Lease or the Participation
Agreement shall bind Owner Participant and shall be effective to transfer or
convey all right, title and interest of Owner Trustee and Owner Participant in
and to the Aircraft. No purchaser or other grantee shall be required to inquire
as to the authorization, necessity, expediency or regularity of such assignment,
sale, transfer or conveyance or as to the application of any sale or other
proceeds with respect thereto by Owner Trustee.
SECTION 11.04. Trust Agreement for Benefit of Certain Parties Only.
Except for the terms of Section 5.02(i) of the Participation Agreement
incorporated in Article VIII hereof and except as otherwise provided in Articles
IX and X hereof, nothing herein, whether expressed or implied, shall be
construed to give any Person other than Owner Trustee and Owner Participant any
legal or equitable right, remedy or claim under or in respect of this Trust
Agreement; but this Trust Agreement shall be held to be for the sole and
exclusive benefit of Owner Trustee and Owner Participant.
SECTION 11.05. Notices; Consent to Jurisdiction. (a) All notices,
demands, instructions and other communications required or permitted to be given
to or made upon any party hereto shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid, or by
telecopier, or by prepaid courier service, and shall be deemed to be given for
purposes of this Trust Agreement on the day that such writing is delivered or
sent to the intended recipient thereof in accordance with the provisions of this
Section 11.05(a). Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this Section 11.05(a), notices,
demands, instructions and other communications in writing shall be given to or
made upon the respective parties hereto at their respective addresses (or to
their respective telecopier numbers) as follows: (A) if to Lessee, Owner
Trustee, Noteholders, Loan Trustee or Owner Participant, to the respective
addresses set forth in Section 16.01 of the Participation Agreement, or (B) if
to a Subsequent Owner Participant, addressed to such Subsequent Owner
Participant at such address as such Subsequent Owner Participant shall have
furnished by notice to the parties hereto or (C) if to any subsequent
Noteholder, addressed to such Noteholder at its address set forth in the
equipment note register maintained pursuant to Section 2.07 of the Indenture.
(b) Each of the parties hereto (A) hereby irrevocably submits itself
to the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of any
suit, action or other proceeding arising out of this Trust Agreement, the
Participation Agreement, the Lease, the Tax Indemnity Agreement or any other
Operative Document, the subject matter of any thereof or any of the transactions
contemplated hereby or thereby brought by any party or parties thereto, or their
successors or assigns, and (B) hereby waives, and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such suit, action or proceeding,
to the extent permitted by applicable law, that the suit, action or proceeding
is brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper, or that the Participation Agreement, the Lease, the Tax
Indemnity Agreement or any other Operative Document or the subject matter of any
thereof or any of the transactions contemplated hereby or thereby may not be
enforced in or by such courts.
SECTION 11.06. Severability. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.07. Waivers, etc. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in compliance with the terms of Article X hereof; and any
waiver of the terms hereof shall be effective only in the specific instance and
for the specific purpose given.
SECTION 11.08. Counterparts. This Trust Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.09. Binding Effect, etc. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, Owner
Trustee and its successors and assigns, and Owner Participant, its successors
and, to the extent permitted by Article VIII hereof, its assigns. Any request,
notice, direction, consent, waiver or other instrument or action by Owner
Participant shall bind its successors and assigns. Any Owner Participant which
shall cease to have any Ownership Interest shall thereupon cease to be a party
hereto or an Owner Participant for any reason and shall have no further
obligations hereunder.
SECTION 11.10. Headings; References. The headings of the various
Articles and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 11.12. No Bankruptcy or Insolvency Proceedings. The trust
created by this Trust Agreement is not intended to be a business trust within
the meaning of Section 101(9)(A)(v) of the Bankruptcy Code. Owner Trustee shall
not have the power to (i) institute proceedings to have the trust created by
this Trust Agreement declared or adjudicated a bankrupt or insolvent, (ii)
consent to the institution of bankruptcy or insolvency proceedings against the
trust created by this Trust Agreement, (iii) file a petition or consent to a
petition seeking reorganization or relief on behalf of the trust created by this
Trust Agreement under any applicable federal or state law relating to
bankruptcy, (iv) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or any similar official) of the trust created by this
Trust Agreement or a substantial portion of the assets of the trust created by
this Trust Agreement, (v) make any assignment for the benefit of the creditors
of the trust created by this Trust Agreement, (vi) cause the trust created by
this Trust Agreement to admit in writing its inability to pay its debts
generally as they become due, or (vii) take any action, or cause the trust
created by this Trust Agreement to take any action, in furtherance of any of the
foregoing. Wells Fargo, by entering into this Trust Agreement, hereby covenants
and agrees that it will not at any time institute against the trust created by
this Trust Agreement, or join in any institution against the trust created by
this Trust Agreement of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any United States federal
or state bankruptcy or insolvency law in connection with any obligations
relating to this Trust Agreement or any of the other Operative Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[___________________________]
By: ___________________________________
Name:
Title:
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION
By: ___________________________________
Name:
Title:
EXHIBIT L TO
PARTICIPATION AGREEMENT
MANDATORY DOCUMENT TERMS
1. May not modify in any material adverse respect as regards the
interests of Noteholders, Subordination Agent, Liquidity Provider, Policy
Provider or Loan Trustee, the Granting Clause of the Indenture Form so as to
deprive Noteholders of a first priority security interest in and mortgage lien
on the Aircraft and the Lease or to eliminate any of the obligations intended to
be secured thereby or otherwise modify in any material adverse respect as
regards the interests of Noteholders, Subordination Agent, Liquidity Provider,
Policy Provider or Loan Trustee the provisions of Article II or III or Sections
4.02, 4.03, 4.04, 5.02, 5.06, 9.01 or Section 10.14 of the Indenture Form.
2. May not modify in any material adverse respect as regards the
interests of Noteholders, Subordination Agent, Liquidity Provider, Policy
Provider or Loan Trustee the provisions of Section 3(c)(iv), Section 3(e),
Section 7(e), clause (G) of the fourth paragraph of Section 10(a), Section 16,
Section 18, the first and third sentences of Section 20 or the penultimate
sentence of Section 24 of the Lease Form or otherwise modify the terms of the
Lease Form so as to deprive Loan Trustee of rights expressly granted to the
"Loan Trustee" therein.
3. May not modify in any material adverse respect as regards the
interests of Noteholders, Subordination Agent, Liquidity Provider, Policy
Provider or Loan Trustee the provisions of Sections 3.01(g)(iii)(A),
3.01(g)(iii)(B), 3.01(g)(iii)(C), Sections 6.01(h), 5.04(c), 6.02(b), 7.01,
16.03 or 16.13 or the provisions of Sections 3.01(h), 3.01(i), 3.01(j), 3.01(k),
3.01(l), 3.01(m), 3.01(n) and the paragraph following Section 3.01(bb) of the
Participation Agreement Form so as to eliminate the requirement to deliver to
Pass Through Trustees or Loan Trustee, as the case may be, the legal opinions to
be provided to such Person thereunder (recognizing that the lawyers rendering
such opinions may be changed) or the provisions of Section 6.01(f)(i)(B) or
otherwise modify the terms of the Participation Agreement Form to deprive
Subordination Agent, Liquidity Provider, Policy Provider or Loan Trustee of any
indemnity or right of reimbursement in its favor for Claims or Taxes.
4. May not modify the definition of "Make-Whole Amount" in Annex A
to the Indenture Form in any material adverse respect as regards the interests
of Noteholders, Subordination Agent, Liquidity Provider, Policy Provider or Loan
Trustee.
Notwithstanding the foregoing, any such Mandatory Document Term may
be modified to correct or supplement any such provision which may be defective
or to cure any ambiguity or correct any mistake, provided, however, that any
such modification shall not materially adversely affect the interests of
Noteholders, Subordination Agent, Liquidity Provider, Policy Provider, Loan
Trustee or the holders of the Pass Through Certificates.
EXHIBIT M TO
PARTICIPATION AGREEMENT
MANDATORY ECONOMIC TERMS
o The principal amount of the new Series G-1 equipment notes, Series G-2
equipment notes and Series C equipment notes, respectively, to be issued by
the owner trustee will be equal to the outstanding principal balance of the
Series G-1 Equipment Notes, Series G-2 Equipment Notes and Series C Equipment
Notes at the time of the Sale/Leaseback Transaction.
o The loan to Aircraft value ratio with respect to the Aircraft (computed on
the basis of an assumed value for the Aircraft no greater than the value for
the Aircraft set forth under "Summary -- Equipment Notes and the aircraft"
under the column "Appraised base value" in the "Prospectus Supplement" (as
such term is defined in the Underwriting Agreement) and the "Depreciation
Assumption" (as such term is defined in the Prospectus Supplement)) at the
time of the issuance of the new Series G-1 equipment notes, Series G-2
equipment notes and Series C equipment notes in connection with the
Sale/Leaseback Transaction and on any Regular Distribution Date (as such term
is defined in the Intercreditor Agreement) thereafter, calculated as set
forth in "Description of the equipment notes -- Loan to value ratios of
equipment notes," in the Prospectus Supplement will not exceed the following
amounts:
Loan to Aircraft Value Ratio
----------------------------
new Series G-1 new Series G-2 new Series C
equipment notes equipment notes equipment notes
--------------- --------------- ---------------
65.0% 59.8% 72.4%
o As of May 1, 2003, the average life of each class of Pass Through
Certificates (computed without regard to the acceleration of any "Equipment
Notes" (as such term is defined the Intercreditor Agreement)) shall not be
less than the minimum nor more than the maximum years from April 30, 2002 set
forth in the following table:
Pass Through Pass Through Pass Through
Certificates Certificates Certificates
issued by the issued by the issued by the
Class G-1 Pass Class G-2 Pass Class C Pass
Through Trust Through Trust Through Trust
-------------- -------------- --------------
Minimum 10.2 years 10.2 years 5.3 years
Maximum 10.5 years 10.2 years 5.5 years
o As of May 1, 2003, the average life of the Series G-1 Equipment Notes,
the Series G-2 Equipment Notes and the Series C Equipment Notes (including
any new Series G-1 equipment notes, Series G-2 equipment notes and Series C
equipment notes to be issued by the owner trustee in connection with a
Sale/Leaseback Transaction) (computed without regard to any acceleration of
Equipment Notes) shall be not less than the minimum nor more than the maximum
years from April 30, 2002 set forth in the following table; provided,
however, that if any new Series G-1 equipment notes, Series G-2 equipment
notes and Series C equipment notes are issued by the owner trustee after
April 30, 2003 in connection with a Sale/Leaseback Transaction, the average
life of such new Series G-1 equipment notes, Series G-2 equipment notes and
Series C equipment notes must correspond to the average life of the Series
G-1 Equipment Notes, Series G-2 Equipment Notes and Series C Equipment Notes,
respectively, being assumed by the owner trustee:
Series G-1 Series G-2 Series C
Equipment Notes Equipment Notes Equipment Notes
--------------- --------------- ---------------
Minimum 8.5 years 10.2 years 4.0 years
Maximum 13.5 years 10.2 years 7.0 years
o The final maturity date of the new Series G-1 equipment notes and the
new Series C equipment notes to be issued by the owner trustee in a
Sale/Leaseback Transaction will not extend beyond January 2, 2023 and January
2, 2012, respectively.
o The final maturity date of the new Series G-2 equipment notes to be issued by
the owner trustee in a Sale/Leaseback Transaction shall be July 2, 2012 and
there shall be no scheduled amortization of such new Series G-2 equipment
notes.
o The interest rate applicable to the new Series G-1 equipment notes shall be
6.718% per annum, the interest rate applicable to the new Series G-2
equipment notes shall be 6.417% per annum and the interest rate applicable to
the new Series C equipment notes shall be 7.779% per annum.
o The payment dates for the new Series G-1 equipment notes, Series G-2
equipment notes and Series C equipment notes to be issued by the owner
trustee in connection with a Sale/Leaseback Transaction and for basic rent
under the lease agreement to be entered into in connection therewith must be
January 2 and July 2, provided that, at Company's election, basic rent may
also be paid at the commencement of such lease agreement.
o Basic rent (and supplemental rent), Stipulated Loss Values and termination
values under the lease agreement to be entered into in connection with a
Sale/Leaseback Transaction must be sufficient to pay amounts due with respect
to the new Series G-1 equipment notes, Series G-2 equipment notes and Series
C equipment notes to be issued by the owner trustee in connection with such
Sale/Leaseback Transaction.
o The amounts payable under the all-risk hull insurance maintained with respect
to the Aircraft must be sufficient to pay the applicable Stipulated Loss
Value.
o (a) The past due rate in the amended and restated indenture and the lease
agreement, (b) the Make-Whole Amount payable under the amended and restated
indenture, (c) the provisions relating to the redemption and purchase of the
new equipment notes in the amended and restated indenture and (d) the
indemnification of Loan Trustee, Subordination Agent, Liquidity Provider,
Policy Provider, Pass Through Trustees and the registered holders of the new
equipment notes with respect to certain taxes and expenses, in each case must
be no less favorable to Loan Trustee, Subordination Agent, Liquidity
Provider, Policy Provider, Pass Through Trustees and the registered holders
of the new equipment notes than as set forth in the Participation Agreement
Form, the Lease Form and the Indenture Form.
EXHIBIT N TO
PARTICIPATION AGREEMENT
FORM OF OPINION OF
SPECIAL COUNSEL FOR POLICY PROVIDER
[Intentionally Omitted]
Annex A to
Participation Agreement and
Indenture and Security Agreement
(N372DA)
DEFINITIONS
(N372DA)
"Additional Insureds" has the meaning specified in Section 7.06(a)
of the Indenture.
"After-Tax Basis" means that indemnity and compensation payments
required to be made on such basis will be supplemented by the Person paying the
base amount by that amount which, when added to such base amount, and after
deduction of all Federal, state, local and foreign Taxes required to be paid by
or on behalf of the payee with respect of the receipt or realization of any such
amounts, and after consideration of any current tax savings of such payee
resulting by way of any deduction, credit or other tax benefit attributable to
such base amount or Tax, shall net such payee the full amount of such base
amount.
"Agreement" and "Participation Agreement" mean that certain
Participation Agreement (N372DA), dated as of April 30, 2002, among Company,
State Street, Pass Through Trustee under each Pass Through Trust Agreement,
Subordination Agent and Loan Trustee, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its Terms.
"Aircraft" means the Airframe (or any Replacement Airframe
substituted therefor pursuant to Section 7.05 of the Indenture) together with
the two Engines described in the Indenture Supplement originally executed and
delivered under the Indenture (or any Replacement Engine that may from time to
time be substituted for any of such Engines pursuant to Section 7.04 or Section
7.05 of the Indenture), whether or not any of such initial or substituted
Engines is from time to time installed on such Airframe or installed on any
other airframe or on any other aircraft. The term "Aircraft" includes any
Replacement Aircraft.
"Airframe" means (a) the Boeing 737-832 aircraft (except (i) the
Engines or engines from time to time installed thereon and any and all Parts
related to such Engine or engines and (ii) items installed or incorporated in or
attached to such Boeing 737-832 aircraft from time to time that are excluded
from the definition of Parts (except Engines or engines)) specified in the
Indenture Supplement originally executed and delivered under the Indenture and
(b) any and all related Parts. The term "Airframe" includes any Replacement
Airframe that is substituted for the Airframe pursuant to Section 7.05 of the
Indenture. At such time as any Replacement Airframe is so substituted and the
Airframe for which such substitution is made is released from the Lien of the
Indenture, such replaced Airframe shall cease to be an Airframe under the
Indenture.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 United
States Code ss.ss.101 et seq., as amended, or any successor statutes thereto.
"Basic Pass Through Trust Agreement" means that certain Pass Through
Trust Agreement, dated as of November 16, 2000, between Company and State
Street, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms (but does not include any Trust
Supplement).
"Bills of Sale" means the FAA Bill of Sale and the Warranty Bill of
Sale.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which commercial banks are required or authorized to close in New York,
New York, Atlanta, Georgia or the city and state in which Loan Trustee maintains
its Corporate Trust Office or receives and disburses funds.
"Certificated Air Carrier" means a Citizen of the United States
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States Code for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo or that otherwise is certified or registered to the extent required to
fall within the purview of Section 1110.
"Citizen of the United States" has the meaning specified for such
term in Section 40102(a)(15) of Title 49 of the United States Code or any
similar legislation of the United States enacted in substitution or replacement
therefor.
"Claim" has the meaning specified in Section 4.02(a) of the
Participation Agreement.
"Class C Pass Through Trust" means the Delta Air Lines Pass Through
Trust 2002-1C created pursuant to the Basic Pass Through Trust Agreement, as
supplemented by Trust Supplement No. 2002-1C, dated as of April 30, 2002 between
Company and State Street.
"Class G-1 Pass Through Trust" means the Delta Air Lines Pass
Through Trust 2002-1G-1 created pursuant to the Basic Pass Through Trust
Agreement, as supplemented by Trust Supplement No. 2002-1G-1, dated as of April
30, 2002 between Company and State Street.
"Class G-1 Trustee" means Pass Through Trustee under the Basic Pass
Through Trust Agreement, as supplemented by Trust Supplement No. 2002-1G-1,
dated as of April 30, 2002 between Company and State Street.
"Class G-2 Pass Through Trust" means the Delta Air Lines Pass
Through Trust 2002-1G-2 created pursuant to the Basic Pass Through Trust
Agreement, as supplemented by Trust Supplement No. 2002-1G-2, dated as of April
30, 2002 between Company and State Street.
"Class G-2 Trustee" means Pass Through Trustee under the Basic Pass
Through Trust Agreement, as supplemented by Trust Supplement No. 2002-1G-2,
dated as of April 30, 2002 between Company and State Street.
"Closing" has the meaning specified in Section 2.03 of the
Participation Agreement.
"Closing Date" means the date of the closing of the transaction
contemplated by the Operative Documents.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning specified in the granting clause of the
Indenture.
"Company" means Delta Air Lines, Inc., and its successors and
permitted assigns.
"Compulsory Acquisition" means requisition of title or other
compulsory acquisition, capture, seizure, deprivation, confiscation or detention
for any reason of the Aircraft by any government that results in the loss of
title or use of the Aircraft by Company (or any Permitted Lessee) for a period
in excess of 180 days, but shall exclude requisition for use or hire not
involving requisition of title.
"Confidential Information" has the meaning specified in Section
10.16 of the Indenture.
"Controlling Party" has the meaning specified in Section 2.06 of the
Intercreditor Agreement.
"Corporate Trust Office" means the Corporate Trust Division of Loan
Trustee located at State Street Bank and Trust Company of Connecticut, National
Association, 225 Asylum Street, Goodwin Square, Hartford, Connecticut, 06103,
Attention: Corporate Trust Division, or such other office at which Loan
Trustee's corporate trust business is administered that Loan Trustee specifies
by notice to Company.
"CRAF Program" means the Civil Reserve Air Fleet Program authorized
under 10 U.S.C. Section 9511 et seq. or any similar or substitute program under
the laws of the United States.
"Debt Rate" means, with respect to any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Indenture.
"Department of Transportation" means the United States Department of
Transportation and any agency or instrumentality of the United States government
succeeding to its functions.
"Direction" has the meaning specified in Section 2.16 of the
Indenture.
"Dollars" and "$" mean the lawful currency of the United States.
"Engine" means (a) each of the two CFM International, Inc.
CFM56-7B26 engines, which may be rated at or limited to -24 or higher power,
listed by manufacturer's serial number in the Indenture Supplement originally
executed and delivered under the Indenture, whether or not from time to time
installed on the Airframe or installed on any other airframe or on any other
aircraft and (b) any Replacement Engine substituted for an Engine pursuant to
Section 7.04 or 7.05 of the Indenture; together in each case with any and all
related Parts. At such time as a Replacement Engine is so substituted and the
Engine for which substitution is made is released from the Lien of the
Indenture, such replaced Engine shall cease to be an Engine under the Indenture.
"Equipment Note" means and includes any Equipment Note originally
issued pursuant to Section 2.02 of the Indenture and any Equipment Note issued
in exchange therefor or replacement thereof pursuant to Section 2.07 or 2.08 of
the Indenture.
"Equipment Note Register" has the meaning specified in Section 2.07
of the Indenture.
"Equipment Note Registrar" has the meaning specified in Section 2.07
of the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA as in effect at the date of
the Participation Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"Event of Default" has the meaning specified in Section 4.01 of the
Indenture.
"Event of Loss" means, with respect to the Aircraft, Airframe or any
Engine, any of the following events with respect to such property:
(a) the loss of such property or of the use thereof due to
destruction, damage beyond repair or rendition of such property permanently
unfit for normal use for any reason whatsoever;
(b) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total loss, a
compromised total loss or a constructive total loss;
(c) the theft or disappearance of such property for a period in
excess of 180 days;
(d) the requisition for use of such property by any government
(other than a requisition for use by a Government or the government of the
country of registry of the Aircraft) that results in the loss of possession of
such property by Company (or any Permitted Lessee) for a period in excess of 12
consecutive months;
(e) the operation or location of the Aircraft, while under
requisition for use by any government, in any area excluded from coverage by any
insurance policy in effect with respect to the Aircraft required by the terms of
Section 7.06 of the Indenture, unless Company shall have obtained indemnity or
insurance in lieu thereof from such government;
(f) any Compulsory Acquisition;
(g) as a result of any law, rule, regulation, order or other action
by the FAA or other government of the country of registry, the use of the
Aircraft or Airframe in the normal business of air transportation is prohibited
by virtue of a condition affecting all aircraft of the same type for a period of
18 consecutive months, unless Company is diligently carrying forward all steps
that are necessary or desirable to permit the normal use of the Aircraft or
Airframe or, in any event, if such use is prohibited for a period of three
consecutive years; and
(h) with respect to an Engine only, any divestiture of title to or
interest in an Engine or any event with respect to an Engine that is deemed to
be an Event of Loss with respect to such Engine pursuant to Section 7.02(a)(vii)
of the Indenture.
An Event of Loss with respect to the Aircraft shall be deemed to
have occurred if an Event of Loss occurs with respect to the Airframe unless
Company elects to substitute a Replacement Airframe pursuant to Section
7.05(a)(i) of the Indenture.
"FAA" means the United States Federal Aviation Administration and
any agency or instrumentality of the United States government succeeding to its
functions.
"FAA Bill of Sale" means the bill of sale for the Aircraft on AC
Form 8050-2 executed by Manufacturer or an affiliate of Manufacturer in favor of
Company and recorded with the FAA.
"Federal Funds Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or if such rate
is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by State Street from
three Federal funds brokers of recognized standing selected by it.
"Government" means the government of any of Canada, France, Germany,
Japan, The Netherlands, Sweden, Switzerland, the United Kingdom or the United
States and any instrumentality or agency thereof.
"Indemnitee" has the meaning specified in Section 4.02(b) of the
Participation Agreement.
"Indenture" means that certain Indenture and Security Agreement
(N372DA), dated as of April 30, 2002, between Company and Loan Trustee, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms, including supplementing by an Indenture Supplement
pursuant to the Indenture.
"Indenture Form" means the form of Amended and Restated Indenture
and Security Agreement attached as Exhibit I to the Participation Agreement.
"Indenture Indemnitee" means (i) Loan Trustee, (ii) State Street,
(iii) so long as it holds any Equipment Note as agent and trustee of any Pass
Through Trustee, Subordination Agent, (iv) Liquidity Provider and Policy
Provider and (v) so long as it is the holder of any Equipment Notes, each Pass
Through Trustee and each of their respective directors, officers, employees,
agents and servants. No holder of a Pass Through Certificate in its capacity as
such shall be an Indenture Indemnitee.
"Indenture Supplement" means a supplement to the Indenture,
substantially in the form of Exhibit A to the Indenture, which particularly
describes the Aircraft, and any Replacement Airframe and or Replacement Engine
included in the property subject to the Lien of the Indenture.
"Intercreditor Agreement" means that certain Intercreditor
Agreement, dated as of the Closing Date, among Pass Through Trustees, Liquidity
Provider, Policy Provider and Subordination Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Interests" has the meaning specified in Section 7.06(a) of the
Indenture.
"Lease" means any lease permitted by the terms of Section 7.02(a) of
the Indenture.
"Lease Form" means the form of Lease Agreement attached as Exhibit H
to the Participation Agreement.
"Lien" means any mortgage, pledge, lien, encumbrance, lease,
sublease, sub-sublease or security interest.
"Liquidity Facilities" means the three Revolving Credit Agreements,
each dated as of the Closing Date, between Subordination Agent, as borrower, and
Liquidity Provider, and any replacements thereof, in each case as the same may
be amended or supplemented or otherwise modified from time to time in accordance
with its terms.
"Liquidity Provider" means Westdeutsche Landesbank Girozentrale, a
German banking institution organized under the laws of the State of North
Rhine-Westphalia, acting through its New York branch, as liquidity provider
under each of the Liquidity Facilities, or any liquidity provider under a
replacement liquidity facility.
"Loan Amount" has the meaning specified in Section 7.06(b) of the
Indenture.
"Loan Trustee" has the meaning specified in the introductory
paragraph of the Indenture.
"Loan Trustee Liens" means any Lien attributable to State Street or
Loan Trustee with respect to the Aircraft, any interest therein or any other
portion of the Collateral arising as a result of (i) claims against State Street
or Loan Trustee not related to its interest in the Aircraft or the
administration of the Collateral pursuant to the Indenture, (ii) acts of State
Street or Loan Trustee not permitted by, or the failure of State Street or Loan
Trustee to take any action required by the Operative Documents or the Pass
Through Documents, (iii) claims against State Street or Loan Trustee relating to
Taxes or Claims that are excluded from the indemnification provided by Section
4.02 of the Participation Agreement pursuant to said Section 4.02 or (iv) claims
against State Street or Loan Trustee arising out of the transfer by any such
party of all or any portion of its interest in the Aircraft, the Collateral, the
Operative Documents or the Pass Through Documents, except while an Event of
Default is continuing and prior to the time that Loan Trustee has received all
amounts due to it pursuant to the Indenture.
"Loss Payment Date" has the meaning specified in Section 7.05(a) of
the Indenture.
"Majority in Interest of Noteholders" means, as of a particular date
of determination and subject to Section 2.16 of the Indenture, the holders of at
least a majority in aggregate unpaid principal amount of all Equipment Notes
outstanding as of such date (excluding any Equipment Notes held by Company or
any affiliate thereof.
"Make-Whole Amount" means, with respect to any Equipment Note, the
amount (as determined by an independent investment banker selected by Company
(and, following the occurrence and during the continuance of an Event of
Default, reasonably acceptable to Loan Trustee)), if any, by which (i) the
present value of the remaining scheduled payments of principal and interest from
the redemption date to maturity of such Equipment Note computed by discounting
each such payment on a semiannual basis from its respective Payment Date
(assuming a 360-day year of twelve 30 day months) using a discount rate equal to
the Treasury Yield exceeds (ii) the outstanding principal amount of such
Equipment Note plus accrued but unpaid interest thereon. For purposes of
determining the Make-Whole Amount, "Treasury Yield" means, at the date of
determination, the interest rate (expressed as a semiannual equivalent and as a
decimal and, in the case of United States Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semiannual
yield to maturity for United States Treasury securities maturing on the Average
Life Date and trading in the public securities market either as determined by
interpolation between the most recent weekly average yield to maturity for two
series of United States Treasury securities, trading in the public securities
markets, (A) one maturing as close as possible to, but earlier than, the Average
Life Date and (B) the other maturing as close as possible to, but later than,
the Average Life Date, in each case as published in the most recent H.15(519)
or, if a weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date is reported on the most recent H.15(519), such
weekly average yield to maturity as published in such H.15(519). "H.15(519)"
means the weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve System.
The date of determination of a Make-Whole Amount shall be the third Business Day
prior to the applicable redemption date and the "most recent H.15(519)" means
the H.15(519) published prior to the close of business on the third Business Day
prior to the applicable redemption date. "Average Life Date" means, for each
Equipment Note to be redeemed, the date which follows the redemption date by a
period equal to the Remaining Weighted Average Life at the redemption date of
such Equipment Note. "Remaining Weighted Average Life" of an Equipment Note, at
the redemption date of such Equipment Note, means the number of days equal to
the quotient obtained by dividing: (i) the sum of the products obtained by
multiplying (A) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Equipment Note, by (B)
the number of days from and including the redemption date to but excluding the
scheduled payment date of such principal installment by (ii) the then unpaid
principal amount of such Equipment Note.
"Mandatory Document Terms" has the meaning specified for such term
in Exhibit L to the Participation Agreement.
"Mandatory Economic Terms" has the meaning specified for such term
in Exhibit M to the Participation Agreement.
"Manufacturer" means The Boeing Company, a Delaware corporation, and
its successors and assigns.
"Manufacturer's Consent" means the Manufacturer's Consent and
Agreement to Assignment of Warranties, dated as of the Closing Date,
substantially in the form of Exhibit E to the Participation Agreement
"Noteholder" means any Person in whose name an Equipment Note is
registered on the Equipment Note Register (including, for so long as it is the
registered holder of any Equipment Notes, Subordination Agent on behalf of Pass
Through Trustees pursuant to the provisions of the Intercreditor Agreement).
"Noteholder Liens" means any Lien attributable to any Noteholder on
or against the Aircraft, any interest herein or any portion of the Collateral,
arising out of any claim against such Noteholder that is not related to the
Operative Documents or Pass Through Documents, or out of any act or omission of
such Noteholder that is not related to the transactions contemplated by, or that
constitutes a breach by such Noteholder of its obligations under, the Operative
Documents or the Pass Through Documents.
"Operative Documents" means, collectively, the Participation
Agreement, the Indenture, each Indenture Supplement, the Manufacturer's Consent
and the Equipment Notes.
"Other Party Liens" means any Lien attributable to Pass Through
Trustee (other than in its capacity as Noteholder), Subordination Agent (other
than in its capacity as Noteholder), Liquidity Provider or Policy Provider on or
against the Aircraft, any interest therein, or any portion of the Collateral
arising out of any claim against such party that is not related to the Operative
Documents or Pass Through Documents, or out of any act or omission of such party
that is not related to the transactions contemplated by, or that constitutes a
breach by such party of its obligations under, the Operative Documents or the
Pass Through Documents.
"Participation Agreement" has the meaning set forth under the
definition of "Agreement".
"Participation Agreement Form" means the form of Amended and
Restated Participation Agreement attached as Exhibit G to the Participation
Agreement.
"Parts" means any and all appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than (a) complete Engines or engines, (b) any items leased by Company or
any Permitted Lessee, (c) cargo containers, (d) components or systems installed
on or affixed to the Airframe that are used to provide individual
telecommunications or electronic entertainment to passengers aboard the
Aircraft, (e) medical and similar emergency equipment and (f) passenger service
items and equipment generally used in but not affixed to the Aircraft, such as
blankets, coffee pots, beverage and meal servicing carts, etc.), so long as the
same are incorporated or installed in or attached to the Airframe or any Engine
or so long as the same are subject to the Lien of the Indenture in accordance
with the terms of Section 7.04 thereof after removal from the Airframe or any
Engine.
"Pass Through Certificates" means the pass through certificates
issued by Pass Through Trustees.
"Pass Through Documents" means the Pass Through Trust Agreements,
the Intercreditor Agreement, the Liquidity Facilities and the Policy Provider
Agreement.
"Pass Through Trust" means each of the three separate grantor trusts
created pursuant to the Pass Through Trust Agreements to facilitate certain of
the transactions contemplated by the Operative Documents.
"Pass Through Trust Agreement" means each of the three separate
Trust Supplements together in each case with the Basic Pass Through Trust
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Pass Through Trustee" has the meaning specified in the introductory
paragraph to the Participation Agreement.
"Pass Through Trustees" means, collectively, Pass Through Trustees
under each Pass Through Trust Agreement.
"Past Due Rate" means, with respect to a particular Series, a rate
per annum equal to the applicable Debt Rate plus 1% and, in any case other than
with respect to a particular Series, the Debt Rate for the Series G-2 Equipment
Notes plus 1%.
"Payment Date" means, for any Equipment Note, each July 2 and
January 2, commencing with January 2, 2003.
"Payment Default" means the occurrence of an event that would give
rise to an Event of Default under Section 4.01(a) of the Indenture upon the
giving of notice or the passing of time or both.
"Permitted Investments" means each of (a) direct obligations of the
United States and agencies thereof; (b) obligations fully guaranteed by the
United States; (c) certificates of deposit issued by, or bankers' acceptances
of, or time deposits with, any bank, trust company or national banking
association incorporated or doing business under the laws of the United States
or one of the states thereof having combined capital and surplus and retained
earnings of at least $100,000,000 and having a rating of A, its equivalent or
better by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P") (or, if
neither such organization then rates such institutions, by any nationally
recognized rating organization in the United States); (d) commercial paper of
any holding company of a bank, trust company or national banking association
described in clause (c); (e) commercial paper of companies having a rating
assigned to such commercial paper by either Moody's or S&P (or, if neither such
organization then rates such commercial paper, by any nationally recognized
rating organization in the United States) equal to either of the two highest
ratings assigned by such organization; (f) Dollar-denominated certificates of
deposit issued by, or time deposits with, the European subsidiaries of (i) any
bank, trust company or national banking association described in clause (c), or
(ii) any other bank or financial institution described in clause (h) or (i)
below; (g) United States-issued Yankee certificates of deposit issued by, or
bankers' acceptances of, or commercial paper issued by, any bank having combined
capital and surplus and retained earnings of at least $100,000,000 and
headquartered in Canada, Japan, the United Kingdom, France, Germany, Switzerland
or The Netherlands and having a rating of A, its equivalent or better by Moody's
or S&P (or, if neither such organization then rates such institutions, by any
nationally recognized rating organization in the United States); (h)
Dollar-denominated time deposits with any Canadian bank having a combined
capital and surplus and retained earnings of at least $100,000,000 and having a
rating of A, its equivalent or better by Moody's or S&P (or, if neither such
organization then rates such institutions, by any nationally recognized rating
organization in the United States); (i) Canadian Treasury Bills fully hedged to
Dollars; (j) repurchase agreements with any financial institution having
combined capital and surplus and retained earnings of at least $100,000,000
collateralized by transfer of possession of any of the obligations described in
clauses (a) through (i) above; (k) bonds, notes or other obligations of any
state of the United States, or any political subdivision of any state, or any
agencies or other instrumentalities of any such state, including, but not
limited to, industrial development bonds, pollution control revenue bonds,
public power bonds, housing bonds, other revenue bonds or any general obligation
bonds, that, at the time of their purchase, such obligations are rated A, its
equivalent or better by Moody's or S&P (or, if neither such organization then
rates such obligations, by any nationally recognized rating organization in the
United States); (1) bonds or other debt instruments of any company, if such
bonds or other debt instruments, at the time of their purchase, are rated A, its
equivalent or better by Moody's or S&P (or, if neither such organization then
rates such obligations, by any nationally recognized rating organization in the
United States); (m) mortgage backed securities (i) guaranteed by the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation or the
Government National Mortgage Association or rated AAA, its equivalent or better
by Moody's or S&P (or, if neither such organization then rates such obligations,
by any nationally recognized rating organization in the United States) or, if
unrated, deemed to be of a comparable quality by Loan Trustee and (ii) having an
average life not to exceed 15 years as determined by standard industry pricing
practices presently in effect; (n) asset-backed securities rated A, its
equivalent or better by Moody's or S&P (or, if neither such organization then
rates such obligations, by any nationally recognized rating organization in the
United States) or, if unrated, deemed to be of a comparable quality by Loan
Trustee; and (o) such other investments approved in writing by Loan Trustee;
provided that, except in clause (m), the instruments described in the foregoing
clauses shall have a maturity of no more than six months from the date of
acquisition thereof. The bank acting as Pass Through Trustee or Loan Trustee is
hereby authorized, in making or disposing of any investment described herein, to
deal with itself (in its individual capacity) or with any one or more of its
affiliates, whether it or such affiliate is acting as an agent of Pass Through
Trustee or Loan Trustee or for any third person or dealing as principal for its
own account.
"Permitted Lessee" means any Person to whom Company is permitted to
lease the Airframe or any Engine pursuant to Section 7.02(a) of the Indenture.
"Permitted Lien" has the meaning specified in Section 7.01 of the
Indenture.
"Person" means any person, including any individual, corporation,
limited liability company, partnership, joint venture, association, joint-stock
company, trust, trustee, unincorporated organization or government or any agency
or political subdivision thereof.
"Policy Provider" means MBIA Insurance Company, a New York-domiciled
stock insurance company.
"Policy Provider Agreement" means the Insurance and Indemnity
Agreement dated as of April 30, 2002 among Subordination Agent, Class G-1
Trustee, Class G-2 Trustee, Company and Policy Provider, including the related
Policy Provider Fee Letter referred to therein, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"Purchase Agreement" means Purchase Agreement No. 2022, dated as of
October 21, 1997, which incorporates by reference the Aircraft General Terms
Agreement AGTA-DAL, dated as of October 21, 1997, between Manufacturer and
Company, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Rating Agencies" has the meaning specified in the Intercreditor
Agreement.
"Related Indemnitee Group" has the meaning specified in Section
4.02(b) of the Participation Agreement.
"Replacement Aircraft" means the Aircraft of which a Replacement
Airframe is part.
"Replacement Airframe" means a Boeing 737-832 aircraft or a
comparable or improved model of Manufacturer (except (a) Engines or engines from
time to time installed thereon and any and all Parts related to such Engine or
engines and (b) items excluded from the definition of Parts (except Engines or
engines)), that shall have been made subject to the Lien of the Indenture
pursuant to Section 7.05 thereof, together with all Parts relating to such
aircraft.
"Replacement Engine" means a CFM International, Inc. CFM56-7B
engine, which may be rated at or limited to -24 or higher power, (or an engine
of the same or another manufacturer of a comparable or an improved model and
suitable for installation and use on the Airframe with the other Engine (or any
other Replacement Engine being substituted simultaneously therewith)) that is
made subject to the Lien of the Indenture pursuant to Section 7.04 or Section
7.05 thereof, together with all Parts relating to such engine.
"Responsible Officer" means, with respect to Company, its Chairman
of the Board, its President, its Chief Operating Officer, any Executive Vice
President, any Senior Vice President, the Chief Financial Officer, any Vice
President, the Treasurer, the Controller or the Secretary.
"Sale/Leaseback Transaction" has the meaning specified for such term
in Section 7.11 of the Participation Agreement.
"Section 1110" means Section 1110 of the Bankruptcy Code.
"Secured Obligations" has the meaning specified in Section 2.06 of
the Indenture.
"Series" means any series of Equipment Notes, including the Series
G-1 Equipment Notes, the Series G-2 Equipment Notes, or the Series C Equipment
Notes.
"Series C Equipment Notes" means Equipment Notes issued and
designated as "Series C Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule I
to the Indenture under the heading "Series C Equipment Notes."
"Series G-1 Equipment Notes" means Equipment Notes issued and
designated as "Series G-1 Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule I
to the Indenture under the heading "Series G-1 Equipment Notes."
"Series G-2 Equipment Notes" means Equipment Notes issued and
designated as "Series G-2 Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule I
to the Indenture under the heading "Series G-2 Equipment Notes."
"State Street" has the meaning specified in the introductory
paragraph of the Participation Agreement.
"Subordination Agent" has the meaning specified in the introductory
paragraph of the Participation Agreement.
"Tax" and "Taxes" mean all governmental fees (including, without
limitation. license, filing and registration fees) and all taxes (including,
without limitation, franchise, excise, stamp, value added, income, gross
receipts, sales, use and property taxes), withholdings, assessments, levies,
imposts, duties or charges, of any nature whatsoever, together with any related
penalties, fines, additions to tax or interest thereon imposed, withheld, levied
or assessed by any country, taxing authority or governmental subdivision thereof
or therein or by any international authority, including any taxes imposed on any
Person as a result of such Person being required to collect and pay over
withholding taxes.
"Transportation Code" means that portion of Title 49 of the United
States Code comprising those provisions formerly referred to as the Federal
Aviation Act of 1958, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
"Trust Supplements" means those agreements supplemental to the Basic
Pass Through Trust Agreement referred to in Schedule II to the Participation
Agreement.
"Underwriters" means the several underwriters listed as such in the
Underwriting Agreement.
"Underwriting Agreement" means that certain Underwriting Agreement,
dated April 23, 2002, among Company and Underwriters.
"United States" means the United States of America.
"U.S. Government Obligations" means securities that are direct
obligations of the United States for the payment of which its full faith and
credit is pledged which are not callable or redeemable, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligations or a specific payment of interest on or
principal of any such U.S. Government Obligations held by such custodian for the
account of the holder of a depository receipt so long as such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligations or the specific payment of interest on or principal
of the U.S. Government Obligations evidenced by such depository receipt.
"Warranty Bill of Sale" means the warranty (as to title) bill of
sale covering the Aircraft executed by Manufacturer or an affiliate of
Manufacturer in favor of Company and specifically referring to each Engine, as
well as the Airframe, constituting a part of the Aircraft.
"Warranty Rights" means all right and interest of Company in, to and
under Parts 1, 2, 3, 4 and 6 of the Product Assurance Document attached as
Exhibit C to the Aircraft General Terms Agreement AGTA-DAL, dated as of October
21, 1997, but only to the extent the same relate to continuing rights of Company
in respect of any warranty or indemnity, express or implied, pursuant to the
Product Assurance Document with respect to the Airframe, it being understood
that the Warranty Rights exclude any and all other right, title and interest of
Company in, to and under the Purchase Agreement and that the Warranty Rights are
subject to the terms of the Manufacturer's Consent.