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EXHIBIT 4(D)(2)
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INDENTURE AND SECURITY AGREEMENT
(N376DA)
Dated as of November 16, 2000
between
DELTA AIR LINES, INC.,
and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Loan Trustee
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One Boeing 737-832 Aircraft
U.S. Registration No. N376DA
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions...................................................................................4
Section 1.02 Other Definitional Provisions.................................................................4
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01 Form of Equipment Notes.......................................................................5
Section 2.02 Issuance and Terms of Equipment Notes.........................................................9
Section 2.03 Method of Payment............................................................................10
Section 2.04 Withholding Taxes............................................................................11
Section 2.05 Application of Payments......................................................................11
Section 2.06 Termination of Interest in Collateral........................................................12
Section 2.07 Registration, Transfer and Exchange of Equipment Notes.......................................12
Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment Notes.........................................13
Section 2.09 Payment of Expenses on Transfer; Cancellation................................................13
Section 2.10 Mandatory Redemption of Equipment Notes......................................................13
Section 2.11 Voluntary Redemption of Equipment Notes......................................................14
Section 2.12 Redemptions; Notice of Redemptions; Repurchases..............................................14
Section 2.13 Subordination................................................................................14
Section 2.14 Certain Payments.............................................................................15
Section 2.15 Repayment of Monies for Equipment Note Payments Held by the Loan Trustee.....................16
Section 2.16 Directions by Subordination Agent............................................................17
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE COLLATERAL
Section 3.01 Basic Distributions..........................................................................17
Section 3.02 Event of Loss; Optional Redemption...........................................................18
Section 3.03 Payments after Event of Default..............................................................19
Section 3.04 Certain Payments.............................................................................21
Section 3.05 Payments to the Company......................................................................21
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ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
Section 4.01 Events of Default............................................................................22
Section 4.02 Remedies.....................................................................................23
Section 4.03 Remedies Cumulative..........................................................................26
Section 4.04 Discontinuance of Proceedings................................................................26
Section 4.05 Waiver of Past Defaults......................................................................27
Section 4.06 Noteholders May Not Bring Suit Except Under Certain Conditions...............................27
ARTICLE V
DUTIES OF THE LOAN TRUSTEE
Section 5.01 Notice of Event of Default...................................................................28
Section 5.02 Action upon Instructions; Certain Rights and Limitations.....................................28
Section 5.03 Indemnification..............................................................................29
Section 5.04 No Duties Except as Specified in Indenture or Instructions...................................29
Section 5.05 No Action Except under Indenture or Instructions.............................................29
Section 5.06 Investment of Amounts Held by the Loan Trustee...............................................29
ARTICLE VI
THE LOAN TRUSTEE
Section 6.01 Acceptance of Trusts and Duties..............................................................30
Section 6.02 Absence of Certain Duties....................................................................30
Section 6.03 No Representations or Warranties as to the Documents.........................................31
Section 6.04 No Segregation of Monies; No Interest........................................................31
Section 6.05 Reliance; Agents; Advice of Counsel..........................................................31
Section 6.06 Instructions from Noteholders................................................................31
ARTICLE VII
OPERATING COVENANTS OF THE COMPANY
Section 7.01 Liens........................................................................................32
Section 7.02 Possession, Operation and Use, Maintenance and Registration..................................33
Section 7.03 Inspection; Financial Information............................................................38
Section 7.04 Replacement and Pooling of Parts; Alterations, Modifications and Additions;
Substitution of Engines....................................................................39
Section 7.05 Loss, Destruction or Requisition.............................................................41
Section 7.06 Insurance....................................................................................45
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ARTICLE VIII
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01 Resignation or Removal; Appointment of Successor.............................................50
Section 8.02 Appointment of Additional and Separate Trustees..............................................51
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01 Amendments to this Indenture without Consent of Holders......................................53
Section 9.02 Amendments to this Indenture with Consent of Holders.........................................53
Section 9.03 Amendments, Waivers, Etc. of the Participation Agreement.....................................54
Section 9.04 Revocation and Effect of Consents............................................................55
Section 9.05 Notation on or Exchange of Equipment Notes...................................................55
Section 9.06 Trustee Protected............................................................................55
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination of Indenture.....................................................................55
Section 10.02 No Legal Title to Collateral in Noteholders..................................................57
Section 10.03 Sale of Aircraft by Loan Trustee is Binding..................................................57
Section 10.04 Indenture for Benefit of the Company, Loan Trustee and Noteholders...........................57
Section 10.05 Notices......................................................................................57
Section 10.06 Severability.................................................................................58
Section 10.07 No Oral Modification or Continuing Waivers...................................................58
Section 10.08 Successors and Assigns.......................................................................59
Section 10.09 Headings.....................................................................................59
Section 10.10 Normal Commercial Relations..................................................................59
Section 10.11 Voting by Noteholders........................................................................59
Section 10.12 Section 1110.................................................................................59
Section 10.13 The Company's Performance and Rights.........................................................59
Section 10.14 Counterparts.................................................................................60
Section 10.15 Governing Law................................................................................60
Section 10.16 Confidential Information.....................................................................60
Section 10.17 Submission to Jurisdiction...................................................................60
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Exhibit A - Form of Indenture Supplement
Exhibit B - List of Permitted Countries
Exhibit C - Aircraft Type Equipment Value for Section 7.06(b)
Schedule I - Description of Equipment Notes
Schedule II - Pass Through Trust Agreement and Pass Through Trust
Supplements
Annex A - Definitions
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INDENTURE AND SECURITY AGREEMENT
(N376DA)
This INDENTURE AND SECURITY AGREEMENT (N376DA), dated as of
November 16, 2000, is made by and between DELTA AIR LINES, INC., a Delaware
corporation (together with its successors and permitted assigns, the "Company"),
and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
expressly stated herein, but solely as Loan Trustee hereunder (together with its
permitted successors hereunder, the "Loan Trustee").
W I T N E S S E T H:
WHEREAS, the parties desire by this Indenture (such term and
other capitalized terms used herein without definition being defined as provided
in Article I), among other things, to provide for (i) the issuance by the
Company of the Equipment Notes and (ii) the assignment, mortgage and pledge by
the Company to the Loan Trustee, as part of the Collateral hereunder, among
other things, of all of the Company's estate, right, title and interest in and
to the Aircraft, as security for, among other things, the Company's obligations
to the Loan Trustee, for the ratable benefit and security of the Noteholders,
subject to Section 2.13 and Article III;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by the Company and authenticated and delivered by the Loan
Trustee hereunder, the valid, binding and enforceable obligations of the
Company; and
WHEREAS, all things necessary to make this Indenture a legal,
valid and binding obligation of the Company for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
occurred;
GRANTING CLAUSE
NOW, THEREFORE, to secure the prompt and complete payment
(whether at stated maturity, by acceleration or otherwise) of principal of,
Make-Whole Amount, if any, and interest on, the Equipment Notes and all other
amounts payable by the Company under the Operative Documents and the performance
and observance by the Company of all the agreements and covenants to be
performed or observed by the Company for the benefit of the Noteholders and the
Indenture Indemnitees contained in the Operative Documents, and in consideration
of the premises and of the covenants contained in the Operative Documents, and
for other good and valuable consideration given by the Loan Trustee, the
Noteholders and the Indenture Indemnitees to the Company at or before the
Closing Date, the receipt of which is hereby acknowledged, the Company does
hereby grant, bargain, sell, convey, transfer, mortgage, assign, pledge and
confirm unto the Loan Trustee and its successors in trust and permitted assigns,
for the security and benefit of the Loan Trustee, the Noteholders and the
Indenture Indemnitees, a first priority security interest in, and mortgage lien
on, all estate, right, title and interest of the Company in, to and under, all
and singular, the following described properties,
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rights, interests and privileges whether now or hereafter acquired (hereinafter
sometimes referred to as the "Collateral"):
(1) the Aircraft, including the Airframe and the Engines,
whether or not any such Engine from time to time is installed on the
Airframe or any other airframe or any other aircraft, and any and all
Parts relating thereto, and, to the extent provided herein, all
substitutions and replacements of, and additions, improvements,
accessions and accumulations to, the Aircraft, including the Airframe,
the Engines and any and all Parts (in each case other than any
substitutions, replacements, additions, improvements, accessions and
accumulations that constitute items excluded from the definition of
Parts by clauses (b), (c), (d), (e) and (f) thereof) relating thereto
(such Airframe and Engines as more particularly described in the
Indenture Supplement executed and delivered with respect to the
Aircraft on the Closing Date or with respect to any substitutions or
replacements therefor) and together with all logs, manuals maintained
on the Aircraft, modification and maintenance records at any time
required to be maintained with respect to the Aircraft, in accordance
with the rules and regulations of the FAA if the Aircraft is registered
under the laws of the United States or the rules and regulations of the
government of the country of registry if the Aircraft is registered
under the laws of a jurisdiction other than the United States;
(2) the Warranty Rights, together with all rights,
powers, privileges, options and other benefits of the Company under the
same;
(3) all requisition proceeds with respect to the Aircraft
or any Part thereof, and all insurance proceeds with respect to the
Aircraft or any Part thereof, but excluding all proceeds of, and rights
under, any insurance maintained by the Company and in excess of that
required under Section 7.06(b);
(4) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Loan
Trustee by or for the account of the Company pursuant to any term of
any Operative Document and held or required to be held by the Loan
Trustee hereunder or thereunder; and
(5) all proceeds of the foregoing;
PROVIDED, HOWEVER, that notwithstanding any of the foregoing
provisions, so long as no Event of Default shall have occurred and be
continuing, the Company shall have the right, to the exclusion of the Loan
Trustee, (i) to quiet enjoyment of the Aircraft, the Airframe, the Parts and the
Engines, and to possess, use, retain and control the Aircraft, the Airframe, the
Parts and the Engines and all revenues, income and profits derived therefrom and
(ii) with respect to the Warranty Rights, to exercise in the Company's name all
rights and powers of the Buyer (as defined in the Purchase Agreement) under the
Warranty Rights and to retain any recovery or benefit resulting from the
enforcement of any warranty or indemnity or other obligation under the Warranty
Rights; provided, further, that notwithstanding the occurrence and continuation
of an Event of Default, the Loan Trustee shall not enter into any amendment or
modification of the Purchase Agreement that would alter the rights, benefits or
obligations of the Company thereunder;
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TO HAVE AND TO HOLD all and singular the aforesaid property
unto the Loan Trustee, and its successors and permitted assigns, in trust for
the ratable benefit and security of the Noteholders and the Indenture
Indemnitees, except as otherwise provided in this Indenture, including Section
2.13 and Article III, without any preference, distinction or priority of any one
Equipment Note over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and in all cases and as to all property specified
in paragraphs (1) through (5) inclusive above, subject to the terms and
provisions set forth in this Indenture.
It is expressly agreed that notwithstanding anything herein to
the contrary, the Company shall remain liable under the Purchase Agreement to
perform all of its obligations thereunder, and, except to the extent expressly
provided in any Operative Document, none of the Loan Trustee, any Noteholders or
any Indenture Indemnitee shall be required or obligated in any manner to perform
or fulfill any obligations of the Company under or pursuant to any Operative
Document, or to make any inquiry as to the nature or sufficiency of any payment
received by it, or present or file any claim or take any action to collect or
enforce the payment of any amount that may have been assigned to it or to which
it may be entitled at any time or times.
Notwithstanding anything herein to the contrary (but without
in any way releasing the Company from any of its duties or obligations under the
Purchase Agreement), the Loan Trustee, the Noteholders and the Indenture
Indemnitees confirm for the benefit of the Manufacturer that in exercising any
rights under the Warranty Rights, or in making any claim with respect to the
Aircraft or other goods and services delivered or to be delivered pursuant to
the Purchase Agreement, the terms and conditions of the Purchase Agreement
relating to the Warranty Rights, including, without limitation, the warranty
disclaimer provisions for the benefit of the Manufacturer, shall apply to and be
binding upon the Loan Trustee, the Noteholders and the Indenture Indemnitees to
the same extent as the Company. The Company hereby directs the Manufacturer, so
long as an Event of Default shall have occurred and be continuing, to pay all
amounts, if any, payable to the Company pursuant to the Warranty Rights directly
to the Loan Trustee to be held and applied as provided herein. Nothing contained
herein shall subject the Manufacturer to any liability to which it would not
otherwise be subject under the Purchase Agreement or modify in any respect the
contract rights of the Manufacturer thereunder except as provided in the
Manufacturer's Consent.
The Company does hereby constitute the Loan Trustee the true
and lawful attorney of the Company (which appointment is coupled with an
interest) with full power (in the name of the Company or otherwise) to ask,
require, demand and receive any and all monies and claims for monies (in each
case including insurance and requisition proceeds) due and to become due to the
Company under or arising out of the Purchase Agreement (to the extent assigned
hereby), and all other property which now or hereafter constitutes part of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings which the Loan Trustee may deem to be necessary or advisable in the
premises; provided that the Loan Trustee shall not exercise any such rights
except during the continuance of an Event of Default. The Company agrees that
promptly upon receipt thereof, to the extent required by the Operative
Documents, it will transfer to the Loan Trustee any and all monies from time to
time received by the Company constituting part of the Collateral, for
distribution by the Loan Trustee pursuant to this Indenture.
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The Company does hereby warrant and represent that it has not
sold, assigned or pledged, and hereby covenants and agrees that it will not
sell, assign or pledge, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to the provisions hereof, any
of its estate, right, title or interest hereby assigned, to any Person other
than the Loan Trustee, except as otherwise provided in or permitted by any
Operative Document.
The Company agrees that at any time and from time to time,
upon the written request of the Loan Trustee, the Company shall promptly and
duly execute and deliver or cause to be duly executed and delivered any and all
such further instruments and documents as the Loan Trustee may reasonably deem
necessary to perfect, preserve or protect the mortgage, security interests and
assignments created or intended to be created hereby or to obtain for the Loan
Trustee the full benefit of the assignment hereunder and of the rights and
powers herein granted, provided that any instrument or other document so
executed by the Company will not expand any obligations or limit any rights of
the Company in respect of the transactions contemplated by the Operative
Documents.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. For all purposes of this Indenture, unless
the context otherwise requires, capitalized terms used but not defined herein
shall have the respective meanings set forth or incorporated by reference in
Annex A.
Section 1.02 Other Definitional Provisions.
(a) The definitions stated herein and in Annex A apply equally to
both the singular and the plural forms of the terms defined.
(b) All references in this Indenture to designated "Articles",
"Sections", "Subsections", "Schedules", "Exhibits", "Annexes" and other
subdivisions are to the designated Article, Section, Subsection, Schedule,
Exhibit, Annex or other subdivision of this Indenture, unless otherwise
specifically stated.
(c) The words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision.
(d) Unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, they shall be deemed to be
followed by the phrase "without limitation".
(e) All references in this Indenture to a "government" are to such
government and any instrumentality or agency thereof.
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ARTICLE II
THE EQUIPMENT NOTES
Section 2.01 Form of Equipment Notes. The Equipment Notes shall be
substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE OFFERED FOR SALE
OR SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH
APPLICABLE STATE OR OTHER LAWS OR EXEMPTIONS FROM SUCH
REGISTRATION REQUIREMENTS ARE AVAILABLE.
DELTA AIR LINES, INC.
SERIES 2000 [___] EQUIPMENT NOTE DUE [___]
ISSUED IN CONNECTION WITH THE BOEING [______] AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N376DA
No.____ Date: [______,__]
$----------------
INTEREST RATE MATURITY DATE
[----] [-----------,-----]
DELTA AIR LINES, INC. (together with its successors and
permitted assigns, the "Company") hereby promises to pay to ___________, or the
registered assignee thereof, the principal amount of ________________ Dollars
($_________) [on __________](1) [in installments on the Payment Dates set forth
in Schedule I hereto, each such installment to be in an amount computed by
multiplying the original principal amount of this Equipment Note by the
percentage set forth in Schedule I hereto opposite the Payment Date on which
such installment is due,](2) and to pay interest in arrears on each Payment Date
at the Debt Rate on the principal amount remaining unpaid from time to time
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) from the date hereof until paid in full. [Notwithstanding the foregoing,
the final payment made on this Equipment Note shall be in an amount sufficient
to discharge in full the unpaid principal amount and all accrued and unpaid
interest on, and any other amounts due under, this Equipment Note.](2)
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Equipment Note becomes due and payable is not a Business
Day, then such payment shall not be made on such scheduled date but shall be
made on the next succeeding Business Day with the same force and effect as if
made on
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(1) To be inserted in non-installment Equipment Notes.
(2) To be inserted in installment Equipment Notes.
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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 Indenture
and Security Agreement (N376DA), dated as of November 16, 2000, between the
Company and State Street Bank and Trust Company of Connecticut, National
Association, as Loan Trustee (the "Loan Trustee"), as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms. All capitalized terms used in this Equipment Note and not defined herein,
unless the context otherwise requires, shall have the respective meanings set
forth or incorporated by reference, and shall be construed and interpreted in
the manner described, in the Indenture. This Equipment Note shall bear interest,
payable on demand, at the Past Due Rate (and not the Debt Rate) (calculated on
the basis of a year of 360 days comprised of twelve 30-day months) on any
principal amount and (to the extent permitted by applicable law) Make-Whole
Amount, if any, interest and any other amounts payable hereunder not paid when
due for any period during which the same is overdue, in each case for the period
the same is overdue. Amounts shall be overdue if not paid in the manner provided
herein or in the Indenture when due (whether at stated maturity, by acceleration
or otherwise).
There shall be maintained an Equipment Note Register for the
purpose of registering transfers and exchanges of Equipment Notes at the
Corporate Trust Office of the Loan Trustee, or at the office of any successor
trustee, in the manner provided in Section 2.07 of the Indenture. The principal
amount and interest and other amounts due hereunder shall be payable in Dollars
in immediately available funds at the Corporate Trust Office of the Loan
Trustee, or as otherwise provided in the Indenture. The Company shall not have
any responsibility for the distribution of any such payment to the Noteholder of
this Equipment Note. Each such payment shall be made on the date such payment is
due and without any presentment or surrender of this Equipment Note, except that
in the case of any final payment with respect to this Equipment Note, the
Equipment Note shall be surrendered to the Loan Trustee for cancellation. The
holder hereof, by its acceptance of this Equipment Note, agrees that, except as
provided in the Indenture, including the subordination provisions referred to
below, each payment of an installment of principal amount, Make-Whole Amount, if
any, and interest received by it hereunder shall be applied: first, to the
payment of accrued interest on this Equipment Note (as well as any interest on
any overdue principal amount, and, to the extent permitted by law, any overdue
Make-Whole Amount, if any, any overdue interest and other overdue amounts
hereunder) to the date of such payment; second, to the payment of Make-Whole
Amount, if any, and third, to the payment of the principal amount of this
Equipment Note (or portion hereof) then due.
This Equipment Note is one of the Equipment Notes referred to
in the Indenture which have been or are to be issued by the Company pursuant to
the terms of the Indenture. The Collateral is held by the Loan Trustee as
security, in part, for the Equipment Notes. The provisions of this Equipment
Note are subject to the Indenture and the Participation Agreement. Reference is
hereby made to the Indenture and the Participation Agreement for a complete
statement of the rights and obligations of the holder of, and the nature and
extent of the security for, this Equipment Note and the rights and obligations
of the holders of, and the nature and extent of the security for, any other
Equipment Notes executed and delivered under the
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Indenture, to all of which terms and conditions in the Indenture and the
Participation Agreement each holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate principal amount of Equipment Notes of the same Series of different
authorized denominations, as requested by the holder surrendering the same.
Prior to the due presentment for registration of transfer of this Equipment
Note, the Company and the Loan Trustee shall deem and treat the Person in whose
name this Equipment Note is registered on the Equipment Note Register as the
absolute owner and holder hereof for the purpose of receiving all amounts
payable with respect to this Equipment Note and for all purposes, and neither
the Company nor the Loan Trustee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10 and 2.11 of the Indenture but not otherwise.
The indebtedness evidenced by this Equipment Note [shall rank
in right of payment equally with all Series A-2 Equipment Notes and all other
Series A-1 Equipment Notes.](3) [shall rank in right of payment equally with all
Series A-1 Equipment Notes and all other Series A-2 Equipment Notes.](4) [is, to
the extent and in the manner provided in the Indenture, subordinate and subject
in right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series A-1 Equipment Notes and Series
A-2 Equipment Notes](5) [Series A-1 Equipment Notes, Series A-2 Equipment Notes
and Series B Equipment Notes](6) [Series A-1 Equipment Notes, Series A-2
Equipment Notes, Series B Equipment Notes and Series C Equipment Notes](7), and
this Equipment Note is issued subject to such provisions.] The Noteholder of
this Equipment Note, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Loan Trustee on such
Noteholder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Indenture and (c) appoints the
Loan Trustee such Noteholder's attorney-in-fact for such purpose.
[Without limiting the foregoing, the](8) [The](9) Noteholder
of this Equipment Note, by accepting the same, agrees that if such Noteholder,
in its capacity as a Noteholder, receives any payment or distribution on any
Secured Obligation in respect of this Equipment Note that it is not entitled to
receive under Section 2.13 or Article III of the Indenture, it shall hold any
amount so received in trust for the Loan Trustee and forthwith turn over such
amount to the Loan
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(3) To be inserted in the case of a Series A-1 Equipment Note.
(4) To be inserted in the case of a Series A-2 Equipment Note.
(5) To be inserted in the case of a Series B Equipment Note.
(6) To be inserted in the case of a Series C Equipment Note.
(7) To be inserted in the case of a Series D Equipment Note.
(8) To be inserted in the case of a Series B Equipment Note, a Series C
Equipment Note or a Series D Equipment Note.
(9) To be inserted in the case of a Series A-1 Equipment Note or a Series
A-2 Equipment Note.
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Trustee in the form received to be applied as provided in Article III of the
Indenture. Unless the certificate of authentication hereon has been executed by
or on behalf of the Loan Trustee by manual signature, this Equipment Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, the Company has caused this Equipment Note
to be executed in its corporate name by its officer thereunto duly authorized on
the date hereof.
DELTA AIR LINES, INC.
By:
------------------------------------
Name:
Title:
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Loan Trustee
By:
------------------------------------
Name:
Title:
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SCHEDULE I(10)
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) four (or if the Series D Equipment Notes are issued, five) separate series
consisting of Series A-1 Equipment Notes, Series A-2 Equipment Notes, Series B
Equipment Notes, Series C Equipment Notes and, if issued, Series D Equipment
Notes and (b) the maturities and principal amounts and shall bear interest at
the applicable Debt Rates specified in Schedule I (or, in the case of a Series D
Equipment Note issued after the Closing Date, as specified in an amendment to
this Indenture). On the Closing Date, each Series A-1 Equipment Note, Series A-2
Equipment Note, Series B Equipment Note and Series C Equipment Note shall be
issued to the Subordination Agent on behalf of each of the Pass Through Trustees
for the Pass Through Trusts created under the Pass Through Trust Agreements
referred to in Schedule II. The Company shall have the option to issue Series D
Equipment Notes at or after the Closing Date. The Equipment Notes shall be
issued in registered form only. The Equipment Notes shall be issued in
denominations of $1,000 and integral multiples thereof, except that one
Equipment Note of each Series may be in an amount that is not an integral
multiple of $1,000.
Each Equipment Note shall bear interest at the Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months), payable in arrears on each Payment Date on the unpaid principal amount
thereof from time to time outstanding until such principal amount is paid in
full, as further provided in the form of Equipment Note set forth in Section
2.01. The principal amount of each Series A-1 Equipment Note shall be payable in
installments on the Payment Dates set forth in Schedule I to such Equipment
Note, each such installment to be in an amount computed by multiplying the
original principal amount of such Equipment Note by the percentage set forth in
Schedule I hereto, the applicable portion of which shall be attached as Schedule
I to such Equipment Note, opposite the Payment Date on which such installment is
due. The principal amount of each Series A-2 Equipment Note and Series B
Equipment Note shall be due in a single payment on November 18, 2010. The
principal amount of each Series C Equipment Note shall be due in a single
payment on November 18, 2005. Each Series D Equipment Note shall be payable in
installments or in a single payment as set forth in an amendment to this
Indenture, and if payable in installments, such installments shall be calculated
as set forth in the second sentence of this paragraph. Notwithstanding the
foregoing, the final payment made under each Series A-1 Equipment Note shall be
in an amount sufficient to
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(10) To be inserted on installment Equipment Notes.
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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 the Company
by the manual or facsimile signature of one of its authorized officers.
Equipment Notes bearing the signatures of individuals who were at the time of
execution the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Equipment Notes or did
not hold such offices at the respective dates of such Equipment Notes. No
Equipment Note shall be secured by or entitled to any benefit under this
Indenture or be valid or obligatory for any purposes unless there appears on
such Equipment Note a certificate of authentication in the form provided herein
executed by the Loan Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Equipment Notes shall be conclusive
evidence, and the only evidence, that such Equipment Note has been duly
authenticated and delivered hereunder.
Section 2.03 Method of Payment. The principal amount of,
interest on, Make-Whole Amount, if any, and, except to the extent expressly
provided herein, all other amounts due to any Noteholder under each Equipment
Note or otherwise payable hereunder shall be payable by the Company in Dollars
by wire transfer of immediately available funds not later than 10:00 a.m. (New
York City time) on the due date of payment to the Loan Trustee at the Corporate
Trust Office for distribution among the Noteholders in the manner provided
herein. The Company shall not have any responsibility for the distribution of
such payment to any Noteholder. Notwithstanding the foregoing or any provision
in any Equipment Note to the contrary, the Loan Trustee will use reasonable
efforts to pay or cause to be paid, if so directed in writing by any Noteholder
(with a copy to the Company), all amounts paid by the Company hereunder and
under such Noteholder's Equipment Note or Equipment Notes to such Noteholder or
a nominee therefor (including all amounts distributed pursuant to Article III)
by transferring, or causing to be transferred, by wire transfer of immediately
available funds in Dollars, prior to 12:00 noon (New York City time) on the due
date of payment, to an account maintained by such Noteholder with a bank located
in the continental United States the amount to be distributed to such
Noteholder, for credit to the account of such Noteholder maintained at such
bank; provided that, in the event the Equipment Notes are not held by the
Subordination Agent on behalf of the Pass Through Trustees, the Loan Trustee may
at its option pay such amounts by check mailed to the Noteholder's address as it
appears on the Equipment Note Register. If, after its receipt of funds at the
place and prior to the time specified above in the immediately preceding
sentence,
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the Loan Trustee fails (other than as a result of a failure of the Noteholder to
provide it with wire transfer instructions) to make any such payment required to
be paid by wire transfer as provided in the immediately preceding sentence on
the Business Day it receives such funds, the Loan Trustee, in its individual
capacity and not as trustee, agrees to compensate such Noteholders for loss of
use of funds at the Federal Funds Rate until such payment is made and the Loan
Trustee shall be entitled to any interest earned on such funds until such
payment is made. Any payment made hereunder shall be made without any
presentment or surrender of any Equipment Note, except that, in the case of the
final payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Loan Trustee for cancellation. Notwithstanding any other
provision of this Indenture to the contrary, the Loan Trustee shall not be
required to make, or cause to be made, wire transfers as aforesaid prior to the
first Business Day on which it is practicable for the Loan Trustee to do so in
view of the time of day when the funds to be so transferred were received by it
if such funds were received after 1:00 p.m. (New York City time) at the place of
payment.
Section 2.04 Withholding Taxes. The Loan Trustee shall
exclude and withhold at the appropriate rate from each payment of principal
amount of, interest on, Make-Whole Amount, if any, and other amounts due
hereunder or under each Equipment Note (which exclusion and withholding shall
constitute payment of such amounts payable hereunder or in respect of such
Equipment Notes, as applicable) any and all withholding taxes applicable thereto
as required by law. The Loan Trustee agrees to act as such withholding agent
and, in connection therewith, whenever any present or future taxes or similar
charges are required to be withheld with respect to any amounts payable
hereunder or in respect of the Equipment Notes, to withhold such amounts (which
withholding shall constitute payment of such amounts payable hereunder or in
respect of such Equipment Notes, as applicable) and timely pay the same to the
appropriate authority in the name of and on behalf of the Noteholders, that it
will file any necessary withholding tax returns or statements when due, and that
as promptly as possible after the payment thereof it will deliver to each
Noteholder (with a copy to the Company) appropriate documentation showing the
payment thereof, together with such additional documentary evidence as any such
Noteholder may reasonably request from time to time. The Loan Trustee agrees to
file any other information reports it is required to file under United States
law.
Section 2.05 Application of Payments. Subject always to
Section 2.13 and except as otherwise provided in Article III, in the case of
each Equipment Note, each payment of an installment of principal amount,
Make-Whole Amount, if any, and interest paid thereon shall be applied:
FIRST, to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue principal amount and (to
the extent permitted by law) any overdue Make-Whole Amount, if any, any
overdue interest and any other overdue amounts thereunder) to the date
of such payment; and
SECOND, to the payment of Make-Whole Amount, if any; and
THIRD, to the payment of principal amount of such Equipment
Note (or portion thereof) then due thereunder.
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Section 2.06 Termination of Interest in Collateral. No
Noteholder or Indenture Indemnitee shall, as such, have any further interest in,
or other right with respect to, the Collateral when and if the principal amount
of, Make-Whole Amount, if any, and interest (including interest on any overdue
amounts) on and all other amounts due under all Equipment Notes held by such
Noteholder and all other sums then payable to such Noteholder or Indenture
Indemnitee, as the case may be, hereunder and under the Participation Agreement
by the Company (collectively, "Secured Obligations") have been paid in full.
Section 2.07 Registration, Transfer and Exchange of Equipment
Notes. The Loan Trustee shall keep a register or registers (the "Equipment Note
Register") in which the Loan Trustee shall provide for the registration of
Equipment Notes and the registration of transfers of Equipment Notes. No such
transfer shall be given effect unless and until registration hereunder shall
have occurred. The Equipment Note Register shall be kept at the Corporate Trust
Office of the Loan Trustee. The Loan Trustee is hereby appointed "Equipment Note
Registrar" for the purpose of registering Equipment Notes and transfers of
Equipment Notes. A holder of any Equipment Note intending to exchange or
transfer such Equipment Note shall surrender such Equipment Note to the Loan
Trustee at the Corporate Trust Office, together with a written request from the
registered holder thereof for the issuance of a new Equipment Note of the same
Series, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Equipment Note and subject to satisfaction of Section 2.09, the
Company shall execute, and the Loan Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Equipment
Notes of a like aggregate principal amount and of the same Series. At the option
of the Noteholder, Equipment Notes may be exchanged for other Equipment Notes of
the same Series of any authorized denominations of a like aggregate principal
amount, upon surrender of the Equipment Notes to be exchanged to the Loan
Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so
surrendered for exchange, the Company shall execute, and the Loan Trustee shall
authenticate and deliver, the Equipment Notes which the Noteholder making the
exchange is entitled to receive. All Equipment Notes issued upon any
registration of transfer or exchange of Equipment Notes (whether under this
Section 2.07 or under Section 2.08 or otherwise under this Indenture) shall be
the valid obligations of the Company evidencing the same respective obligations,
and entitled to the same security and benefits under this Indenture, as the
Equipment Notes surrendered upon such registration of transfer or exchange.
Every Equipment Note presented or surrendered for registration of transfer shall
be duly endorsed or be accompanied by a written instrument of transfer in form
satisfactory to the Loan Trustee, duly executed by the Noteholder or such
Noteholder's attorney duly authorized in writing, and the Loan Trustee shall
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act of 1933, as amended, and the securities laws of any
applicable state or jurisdiction. The Loan Trustee shall make a notation on each
new Equipment Note of the amount of all payments of principal amount previously
made on the old Equipment Note or Equipment Notes with respect to which such new
Equipment Note is issued and the date to which interest on such old Equipment
Note or Equipment Notes has been paid. Principal, interest and all other amounts
shall be deemed to have been paid on such new Equipment Note to the date on
which such amounts have been paid on such old Equipment Note. The Company shall
not be required to exchange any surrendered Equipment Notes as provided above
(a) during the ten-day period preceding the due date of any payment on such
Equipment Note or (b) that has been called for redemption. The Company and the
Loan Trustee shall in all cases deem and treat the Person in
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whose name any Equipment Note has been issued and registered on the Equipment
Note Register as the absolute owner and Noteholder of such Equipment Note for
the purpose of receiving payment of all amounts payable with respect to such
Equipment Note and for all other purposes, and neither the Company nor the Loan
Trustee shall be affected by any notice to the contrary. The Loan Trustee will
promptly notify the Company of each registration of a transfer of an Equipment
Note. Any such transferee of an Equipment Note, by its acceptance of an
Equipment Note, agrees to the provisions of the Operative Documents applicable
to Noteholders, and shall be deemed to have represented, warranted and
covenanted to the parties to the Participation Agreement as to the matters
represented, warranted and covenanted by the Noteholders, including the Pass
Through Trustees, in the Participation Agreement. Subject to compliance by the
Noteholder and any transferee of the requirements set forth in this Section 2.07
and in Section 2.09, the Loan Trustee and the Company shall use all reasonable
efforts to issue new Equipment Notes upon transfer or exchange within ten
Business Days of the date an Equipment Note is surrendered for transfer or
exchange.
Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment
Notes. If any Equipment Note becomes mutilated, destroyed, lost or stolen, the
Company shall, upon the written request of the holder of such Equipment Note and
subject to satisfaction of this Section 2.08 and of Section 2.09, execute and
the Loan Trustee shall authenticate and deliver in replacement thereof a new
Equipment Note of the same Series, payable in the same principal amount, dated
the same date and captioned as issued in connection with the Aircraft. If the
Equipment Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Loan Trustee, and a photocopy thereof shall be furnished to
the Company. If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to the Company and the
Loan Trustee such security or indemnity as may be required by them to save the
Company and the Loan Trustee harmless and evidence satisfactory to the Company
and the Loan Trustee of the destruction, loss or theft of such Equipment Note
and of the ownership thereof.
Section 2.09 Payment of Expenses on Transfer;
Cancellation. (a) No service charge shall be made to a Noteholder for any
registration of transfer or exchange of Equipment Notes, but the Loan Trustee,
as Equipment Note Registrar, may require payment of a sum sufficient to cover
any Tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Equipment Notes.
(b) The Loan Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation, shall send a copy of such canceled Equipment Notes marked
"canceled" to the Company, and shall destroy the canceled Equipment Notes.
Section 2.10 Mandatory Redemption of Equipment Notes. The
Company shall redeem the Equipment Notes in whole in connection with an Event of
Loss in respect of the Airframe or the Airframe and the Engines installed
thereon (unless the Company has performed the option set forth in Section
7.05(a)(i) with respect thereto) on or before the Loss Payment Date at a
redemption price equal to 100% of the unpaid principal amount thereof, together
with all accrued interest thereon to (but excluding) the date of redemption, but
without any Make-Whole Amount.
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Section 2.11 Voluntary Redemption of Equipment Notes. All,
but not less than all, of the Equipment Notes may be redeemed in whole by the
Company upon at least 20 days' revocable prior written notice to the Loan
Trustee at a redemption price equal to 100% of the unpaid principal amount of
the Equipment Notes being redeemed, together with accrued interest thereon to
(but excluding) the date of redemption and all other amounts payable hereunder
or under the Participation Agreement to the Noteholders plus the Make-Whole
Amount, if any. Any notice shall become irrevocable three days before the
redemption date if not previously revoked.
Section 2.12 Redemptions; Notice of Redemptions; Repurchases.
(a) No redemption of any Equipment Note may be made except to the extent and in
the manner expressly permitted by this Indenture. At such time as no Pass
Through Certificates are outstanding, the Company may at any time repurchase any
of the Equipment Notes at any price in the open market and may hold, resell or
surrender such Equipment Notes to the Loan Trustee for cancellation.
(b) Notice of redemption with respect to the Equipment Notes
shall be given by the Loan Trustee by first-class mail, postage prepaid, mailed
not less than 15 nor more than 60 days prior to the applicable redemption date,
to each Noteholder at such Noteholder's address appearing in the Equipment Note
Register. All notices of redemption shall state: (1) the redemption date, (2)
the applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that, if any such Equipment Notes are then outstanding,
interest on such Equipment Notes shall cease to accrue on and after such
redemption date and (4) the place or places where such Equipment Notes are to be
surrendered for payment of the redemption price.
(c) On or before the redemption date, the Company (or any
person on behalf of the Company) shall, to the extent an amount equal to the
redemption price for the Equipment Notes to be redeemed on the redemption date
shall not then be held in the Collateral, deposit or cause to be deposited with
the Loan Trustee by 10:00 a.m. (New York City time) on the redemption date in
immediately available funds the redemption price of the Equipment Notes to be
redeemed.
(d) Notice of redemption having been given as aforesaid (and
not revoked as permitted by Section 2.11), the Equipment Notes to be redeemed
shall, on the redemption date, become due and payable at the Corporate Trust
Office of the Loan Trustee, and from and after such redemption date (unless
there is a default in the deposit of the redemption price pursuant to Section
2.12(c)) any such Equipment Notes then outstanding shall cease to bear interest.
Upon surrender of any such Equipment Note for redemption in accordance with said
notice, such Equipment Note shall be redeemed at the redemption price.
Section 2.13 Subordination. (a) The indebtedness evidenced by
the Series A-1 Equipment Notes and Series A-2 Equipment Notes shall rank in
right of payment equally with all other Series A-1 Equipment Notes and Series
A-2 Equipment Notes. The indebtedness evidenced by the Series B Equipment Notes
is, to the extent and in the manner provided in this Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations in respect of the Series A-1 Equipment Notes and Series A-2
Equipment Notes, and the Series B Equipment Notes are issued subject to such
provisions. The indebtedness evidenced
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by the Series C Equipment Notes is, to the extent and in the manner provided in
this Indenture, subordinate and subject in right of payment to the prior payment
in full of the Secured Obligations in respect of the Series A-1 Equipment Notes,
the Series A-2 Equipment Notes and the Series B Equipment Notes, and the Series
C Equipment Notes are issued subject to such provisions. The indebtedness
evidenced by the Series D Equipment Notes, if issued, shall be, to the extent
and in the manner provided in this Indenture, subordinate and subject in right
of payment to the prior payment in full of the Secured Obligations in respect of
the Series A-1 Equipment Notes, the Series A-2 Equipment Notes, the Series B
Equipment Notes and the Series C Equipment Notes, and the Series D Equipment
Notes, if issued, shall be issued subject to such provisions. By acceptance of
its Equipment Notes of any Series, each Noteholder of such Series (a) agrees to
and shall be bound by such provisions, (b) authorizes and directs the Loan
Trustee on such Noteholder's behalf to take any action necessary or appropriate
to effectuate the subordination as provided in this Indenture and (c) appoints
the Loan Trustee as such Noteholder's attorney-in-fact for such purpose.
(b) The Company, the Loan Trustee and, by acceptance of its
Equipment Notes of any Series, each Noteholder of such Series, hereby agree that
no payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Noteholder of such Series, including any payment or
distribution of cash, property or securities, after the occurrence of any of the
events referred to in Section 4.01(f) or after the commencement of any
proceedings of the type referred to in Sections 4.01(g), (h) or (i), except as
expressly provided in Article III.
(c) By the acceptance of its Equipment Notes of any Series,
each Noteholder of such Series agrees that if such Noteholder, in its capacity
as a Noteholder, receives any payment or distribution on any Secured Obligations
in respect of such Series that it is not entitled to receive under this Section
2.13 or Article III hereof, it will hold any amount so received in trust for the
Loan Trustee and forthwith turn over such amount to the Loan Trustee in the form
received to be applied as provided in Article III.
Section 2.14 Certain Payments. The Company agrees to pay to
the Loan Trustee for distribution in accordance with Section 3.04:
(a) an amount or amounts equal to the fees payable to the
Liquidity Provider under Section 2.03 of each Liquidity Facility and the related
Fee Letter (as defined in the Intercreditor Agreement), multiplied by a
fraction, the numerator of which is the sum of the then outstanding aggregate
principal amount of the Series A-1 Equipment Notes, Series A-2 Equipment Notes,
Series B Equipment Notes and Series C Equipment Notes and the denominator of
which is the sum of the then outstanding aggregate principal amount of all
"Series A-1 Equipment Notes," "Series A-2 Equipment Notes," "Series B Equipment
Notes" and "Series C Equipment Notes" (in each case as defined in the
Intercreditor Agreement);
(b) if any payment default shall have occurred and be
continuing with respect to interest on any Series A-1 Equipment Notes, Series
A-2 Equipment Note, Series B Equipment Note or Series C Equipment Note, (x) the
excess, if any, of (1) the amount equal to the sum of interest on any Unpaid
Advance or Applied Provider Advance payable under Section 3.07 of each Liquidity
Facility plus any other amounts payable in respect of such Unpaid Advance or
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Applied Provider Advance under Section 3.01, 3.03 or 3.09 of the Liquidity
Facility under which such Unpaid Advance or Applied Provider Advance was made
over (2) the sum of Investment Earnings from any Final Advance plus any amount
of interest at the Past Due Rate actually payable (whether or not in fact paid)
by the Company in respect of the overdue scheduled interest on the Equipment
Notes in respect of which such Unpaid Advance or Applied Provider Advance was
made, multiplied by (y) a fraction, the numerator of which is the then aggregate
overdue amounts of interest on the Series A-1 Equipment Notes, Series A-2
Equipment Notes, Series B Equipment Notes and Series C Equipment Notes (other
than interest becoming due and payable solely as a result of acceleration of any
such Equipment Notes) and the denominator of which is the then aggregate overdue
amounts of interest on all "Series A-1 Equipment Notes", "Series A- 2 Equipment
Notes", "Series B Equipment Notes" and "Series C Equipment Notes" (in each case
as defined in the Intercreditor Agreement) (other than interest becoming due and
payable solely as a result of acceleration of any such "Equipment Notes");
(c) any amounts owed to the Liquidity Provider by the
Subordination Agent as borrower under Section 3.01 (other than in respect of an
Unpaid Advance or Applied Provider Advance), 3.03 (other than in respect of an
Unpaid Advance or Applied Provider Advance), 7.05 and 7.07 of each Liquidity
Facility (or similar provisions of any Replacement Liquidity Facility)
multiplied by the fraction specified in the foregoing clause (a); and
(d) an amount or amounts equal to the compensation,
including reasonable expenses and disbursements actually incurred, payable to
the Subordination Agent under Section 6.07 of the Intercreditor Agreement,
multiplied by the fraction specified in the foregoing clause (a) (but in any
event without duplication of any amount or amounts payable by the Company in
respect of such compensation under any other Operative Document or Pass Through
Document).
For purposes of this paragraph, the terms "Advance", "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 the Loan Trustee. Any money held by the Loan Trustee in trust
for any payment of the principal of, Make-Whole Amount, if any, or interest or
any other amounts due on, any Equipment Note, including, without limitation, any
money deposited pursuant to Section 2.12(c) or Section 10.01, and remaining
unclaimed for two years after the due date for such payment (or such lesser time
as the Loan Trustee is satisfied, after 60 days' notice from the Company, is one
month prior to the escheat period provided under applicable state law) shall be
paid to the Company. The Noteholders of any outstanding Equipment Notes shall
thereafter, as unsecured general creditors, look only to the Company for payment
thereof, and all liability of the Loan Trustee with respect to such trust money
shall thereupon cease. The Loan Trustee, before being required to make any such
repayment, may at the expense of the Company cause to be mailed to each such
Noteholder notice that such money remains unclaimed. After a date specified in
such notice, which may not be less than 30 days from the date of mailing, any
unclaimed balance of such money then remaining will be repaid to the Company as
provided herein.
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Section 2.16 Directions by Subordination Agent. So long
as the Subordination Agent is a Noteholder, notwithstanding anything contained
herein or in any other Operative Document to the contrary, in exercising its
right to vote the Equipment Notes held by it, or in giving or taking any
direction, consent, request, demand, instruction, authorization, notice, waiver
or other action provided by this Indenture or in respect of the Equipment Notes
to be given or taken by a Noteholder (each such vote or other action, a
"Direction") in respect of such Equipment Notes, the Subordination Agent may act
in accordance with any votes, directions, consents, requests, demands,
instructions, authorizations, notices, waivers or other actions given or taken
by any applicable Pass Through Trustee or the Controlling Party pursuant to the
Intercreditor Agreement, including without limitation pursuant to Section 2.06,
Article IV or Section 8.01(b) thereof. The Subordination Agent shall be
permitted (x) to give a Direction with respect to less than the entire principal
amount of any single Equipment Note held by it, and (y) to give different
Directions with respect to different portions of the principal amount of any
single Equipment Note held by it. Any Direction given by the Subordination Agent
at any time with respect to more than a majority in aggregate unpaid principal
amount of all of the Equipment Notes issued and then outstanding hereunder shall
be deemed to have been given by a Majority in Interest of Noteholders.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
FROM THE COLLATERAL
Section 3.01 Basic Distributions. Except as otherwise
provided in Sections 3.02, 3.03 and 3.04, each periodic payment by the Company
of regularly scheduled installments of principal or interest on the Equipment
Notes received by the Loan Trustee shall be promptly distributed in the
following order of priority:
FIRST, so much of such payment as is required to pay in full
the aggregate amount of the payment or payments of principal amount and
interest (as well as any interest on any overdue principal amount and,
to the extent permitted by applicable law, on any overdue interest and
any other overdue amounts) then due under all Series A-1 Equipment
Notes and Series A-2 Equipment Notes shall be distributed to the
Noteholders of Series A-1 Equipment Notes and Series A-2 Equipment
Notes ratably, without priority of one over the other, in the
proportion that the amount of such payment or payments then due under
each Series A-1 Equipment Note or Series A-2 Equipment Note bears to
the aggregate amount of the payments then due under all Series A-1
Equipment Notes and Series A-2 Equipment Notes;
SECOND, after giving effect to clause "first" above, so much
of such payment remaining as is required to pay in full the aggregate
amount of the payment or payments of principal amount and interest (as
well as any interest on any overdue principal amount and, to the extent
permitted by applicable law, on any overdue interest and other overdue
amounts) then due under all Series B Equipment Notes shall be
distributed to the Noteholders of Series B Equipment Notes ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each
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Series B Equipment Note bears to the aggregate amount of the payments
then due under all Series B Equipment Notes;
THIRD, after giving effect to clause "second" above, so much
of such payment remaining as is required to pay in full the aggregate
amount of the payment or payments of principal amount and interest (as
well as any interest on any overdue principal amount and, to the extent
permitted by applicable law, on any overdue interest and any other
overdue amounts) then due under all Series C Equipment Notes shall be
distributed to the Noteholders of Series C Equipment Notes ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series C
Equipment Note bears to the aggregate amount of the payments then due
under all Series C Equipment Notes;
FOURTH, after giving effect to clause "third" above, so much
of such payment remaining as is required to pay in full the aggregate
amount of the payment or payments of principal amount and interest (as
well as any interest on any overdue principal amount and, to the extent
permitted by applicable law, on any overdue interest and any other
overdue amounts) then due under all Series D Equipment Notes shall be
distributed to the Noteholders of Series D Equipment Notes ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series D
Equipment Note bears to the aggregate amount of the payments then due
under all Series D Equipment Notes; and
FIFTH, the balance, if any, of such installment remaining
thereafter shall be distributed to the Company.
Section 3.02 Event of Loss; Optional Redemption. Except
as otherwise provided in Sections 3.03 and 3.04 and subject to the following
proviso, any payments received by the Loan Trustee with respect to the Aircraft
as the result of (a) an Event of Loss (including amounts paid by the Company
pursuant to Section 2.10) or (b) an optional redemption of the Equipment Notes
pursuant to Section 2.11 shall be applied to redemption of the Equipment Notes
pursuant to Section 2.10 or Section 2.11, as applicable, and to payment of all
other Secured Obligations by applying such funds in the following order of
priority:
FIRST, (i) to reimburse the Loan Trustee and the Noteholders
for any reasonable costs or expenses actually incurred in connection
with such redemption for which they are entitled to reimbursement, or
indemnity by the Company, under the Operative Documents; and then (ii)
to pay any other amounts then due (except as provided in clause
"second" below) to the Loan Trustee, the Noteholders and the Indenture
Indemnitees under this Indenture, the Participation Agreement or the
Equipment Notes;
SECOND, (i) to pay the amounts specified in subclause (i) of
clause "third" of Section 3.03 plus Make-Whole Amount, if any, then due
and payable in respect of the Series A-1 Equipment Notes and the Series
A-2 Equipment Notes; (ii) after giving effect to subclause (i) above,
to pay the amounts specified in subclause (ii) of clause "third" of
Section 3.03 plus Make-Whole Amount, if any, then due and payable in
respect of the Series B Equipment Notes; (iii) after giving effect to
subclause (ii) above, to pay the
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amounts specified in subclause (iii) of clause "third" of Section 3.03
plus Make-Whole Amount, if any, then due and payable in respect of the
Series C Equipment Notes; and (iv) after giving effect to subclause
(iii) above, to pay the amounts specified in subclause (iv) of clause
"third" of Section 3.03 plus Make-Whole Amount, if any, then due and
payable in respect of the Series D Equipment Notes; and
THIRD, the balance, if any, of such payments shall be
distributed to the Company.
Notwithstanding the foregoing, any insurance, condemnation or similar proceeds
resulting from an Event of Loss that are received by the Loan Trustee shall be
held or disbursed by the Loan Trustee as provided by Sections 7.05(c) and
7.06(d). Any such money held by the Loan Trustee shall be invested as provided
in Section 5.06.
No Make-Whole Amount shall be payable on the Equipment Notes
in connection with their redemption as a result of an Event of Loss in respect
of the Airframe or the Airframe and the Engines installed thereon.
Section 3.03 Payments after Event of Default. Except as
otherwise provided in Section 3.04, all payments received and amounts held or
realized by the Loan Trustee (including any amounts realized by the Loan Trustee
from the exercise of any remedies pursuant to Article IV) after both an Event of
Default shall have occurred and be continuing and the Equipment Notes shall have
become due and payable pursuant to Section 4.02(a), as well as all payments or
amounts then held by the Loan Trustee as part of the Collateral, shall be
promptly distributed by the Loan Trustee in the following order of priority:
FIRST, so much of such payments or amounts as is required to
(i) reimburse the Loan Trustee, to the extent the Loan Trustee is
entitled to be reimbursed or indemnified under the Operative Documents,
for any Tax, expense or other loss (including, without limitation, all
amounts to be expended at the expense of, or charged upon the tolls,
rents, revenues, issues, products and profits of, the Collateral and
every part thereof pursuant to Section 4.02(a)) actually incurred by
the Loan Trustee (to the extent not previously reimbursed), the
expenses of any sale, taking or other proceeding, reasonable attorneys'
fees and expenses, court costs and any other expenditures actually
incurred or expenditures or advances made by the Loan Trustee or the
Noteholders in the protection, exercise or enforcement of any right,
power or remedy or any damages sustained by the Loan Trustee or any
Noteholder, liquidated or otherwise, upon such Event of Default shall
be applied by the Loan Trustee as between itself and the Noteholders in
reimbursement of such expenses and any other expenses for which the
Loan Trustee or the Noteholders are entitled to reimbursement under any
Operative Document, and (ii) to pay all amounts payable (except as
provided in clauses "second" and "third" below) to the other Indenture
Indemnitees hereunder and under the Participation Agreement; and in
case the aggregate amount so to be distributed is insufficient to pay
as aforesaid, then ratably, without priority of one over the other, in
proportion to the amounts owed each hereunder;
SECOND, so much of such payments or amounts remaining as is
required to reimburse the then existing or prior Noteholders for
payments made pursuant to Section
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5.03 (to the extent not previously reimbursed) shall be distributed to
such then existing or prior Noteholders ratably, without priority of
one over the other, in accordance with the amount of the payment or
payments made by each such then existing or prior Noteholder pursuant
to Section 5.03;
THIRD, (i) so much of such payments or amounts remaining as is
required to pay in full the aggregate unpaid principal amount of all
Series A-1 Equipment Notes and Series A-2 Equipment Notes and the
accrued but unpaid interest and all other Secured Obligations in
respect of the Series A-1 Equipment Notes and Series A-2 Equipment
Notes to the date of distribution shall be distributed to the
Noteholders of Series A-1 Equipment Notes and Series A-2 Equipment
Notes ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all Series A-1
Equipment Notes and Series A-2 Equipment Notes held by each Noteholder
plus the accrued but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution bears to the aggregate unpaid
principal amount of all Series A-1 Equipment Notes and Series A-2
Equipment Notes held by all such Noteholders plus the accrued but
unpaid interest and other amounts due thereon to the date of
distribution; (ii) after giving effect to subclause (i) above, so much
of such payments or amounts remaining as is required to pay in full the
aggregate unpaid principal amount of all Series B Equipment Notes and
the accrued but unpaid interest and all other Secured Obligations in
respect of the Series B Equipment Notes to the date of distribution
shall be distributed to the Noteholders of Series B Equipment Notes
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid principal amount of all Series B Equipment Notes
held by each Noteholder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder to the date of distribution bears
to the aggregate unpaid principal amount of all Series B Equipment
Notes held by all such Noteholders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution; (iii) after
giving effect to subclause (ii) above, so much of such payments or
amounts remaining as is required to pay in full the aggregate unpaid
principal amount of all Series C Equipment Notes and the accrued but
unpaid interest and all other Secured Obligations in respect of the
Series C Equipment Notes to the date of distribution shall be
distributed to the Noteholders of Series C Equipment Notes ratably,
without priority of one over the other, in the proportion that the
aggregate unpaid principal amount of all Series C Equipment Notes held
by each Noteholder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder to the date of distribution bears
to the aggregate unpaid principal amount of all Series C Equipment
Notes held by all such Noteholders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution; and (iv)
after giving effect to subclause (iii) above, so much of such payments
or amounts remaining as is required to pay in full the aggregate unpaid
principal amount of all Series D Equipment Notes and the accrued but
unpaid interest and all other Secured Obligations in respect of the
Series D Equipment Notes to the date of distribution shall be
distributed to the Noteholders of Series D Equipment Notes, ratably,
without priority of one over the other, in the proportion that the
aggregate unpaid principal amount of all Series D Equipment Notes held
by each Noteholder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder to the date of distribution bears
to the aggregate unpaid principal amount of all Series D Equipment
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Notes held by all such Noteholders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution; and
FOURTH, the balance, if any, of such payments or amounts shall
be distributed to the Company.
No Make-Whole Amount shall be payable on the Equipment Notes
as a consequence of or in connection with an Event of Default or the
acceleration of the Equipment Notes.
Section 3.04 Certain Payments. (a) Any payments received
by the Loan Trustee for which provision as to the application thereof is made in
this Indenture other than in this Article III shall be applied as provided in
those provisions. Without limiting the foregoing, any payments received by the
Loan Trustee which are payable to the Company pursuant to any of the provisions
of this Indenture other than those set forth in this Article III (including
Sections 5.06, 7.05 and 7.06 hereof) shall be so paid to the Company. Any
payments received by the Loan Trustee for which no provision as to the
application thereof is made in this Indenture and for which such provision is
made in any other Operative Document shall be applied forthwith to the purpose
for which such payment was made in accordance with the terms of such other
Operative Document.
(b) The Loan Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Company pursuant to
Section 4.02 of the Participation Agreement in respect of (i) State Street and
the Loan Trustee, (ii) the Subordination Agent, (iii) the Pass Through Trustees
and (iv) the Liquidity Provider, in each case, directly to the Person entitled
thereto. Any payment received by the Loan Trustee from the Company under Section
2.14 shall be distributed to the Subordination Agent to be distributed in
accordance with Section 2.03(c) of the Intercreditor Agreement.
(c) Any payments received by the Loan Trustee not
constituting part of the Collateral or otherwise for which no provision as to
the application thereof is made in any Operative Document shall be distributed
by the Loan Trustee to the Company. Further, and except as otherwise provided in
Sections 3.02, 3.03 and 3.04, all payments received and amounts realized by the
Loan Trustee with respect to the Aircraft, to the extent received or realized at
any time after payment in full of all Secured Obligations or after the
conditions set forth in Section 10.01(a)(ii) for the defeasance of this
Indenture have been satisfied, as well as any amounts remaining as part of the
Collateral after the occurrence of such payment in full or defeasance, shall be
distributed by the Loan Trustee to the Company.
Section 3.05 Payments to the Company. Any amounts
distributed hereunder by the Loan Trustee to the Company shall be paid to the
Company (within the time limits contemplated by Section 2.03(a)) by wire
transfer of funds of the type received by the Loan Trustee at such office and to
such account or accounts of such entity or entities as shall be designated by
notice from the Company to the Loan Trustee from time to time.
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ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
Section 4.01 Events of Default. Each of the following
events constitutes an "EVENT OF DEFAULT" whether such event is voluntary or
involuntary or comes about or is effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body and each such Event of
Default is deemed to exist and continue so long as, but only as long as, it has
not been remedied or explicitly waived:
(a) the Company fails to make any payment of principal
amount of, Make-Whole Amount, if any, or interest on, any Equipment Note within
15 days after such payment is due;
(b) the Company fails to make payment when the same is
due of any amount (other than amounts referred to in Section 4.01(a)) due
hereunder, under any Equipment Note or under any other Operative Document, and
such failure continues unremedied for 30 days after the receipt by the Company
of written notice thereof from the Loan Trustee or any Noteholder;
(c) the Company fails to carry and maintain insurance or
indemnity on or with respect to the Aircraft in accordance with the provisions
of Section 7.06; provided that no such failure to carry and maintain insurance
shall constitute an Event of Default until the earlier of (i) the date such
failure shall have continued unremedied for a period of 30 days after receipt by
the Loan Trustee of the notice of cancellation or lapse referred to in Section
7.06 or (ii) the date such insurance is not in effect as to the Loan Trustee;
(d) the Company fails to perform or observe any other
covenant, condition or agreement to be performed or observed by it under any
Operative Document, and such failure continues unremedied for a period of 60
days after receipt by the Company of written notice thereof from the Loan
Trustee or any Noteholder; provided that, if such failure is capable of being
remedied, no such failure shall constitute an Event of Default for a period of
one year after such notice is received by the Company so long as the Company is
diligently proceeding to remedy such failure;
(e) any representation or warranty made by the Company in
any Operative Document was incorrect in any material respect at the time made,
and such incorrectness continues to be material to the transactions contemplated
hereby and continues unremedied for a period of 60 days after receipt by the
Company of written notice thereof from the Loan Trustee; provided that, if such
incorrectness is capable of being remedied, no such incorrectness shall
constitute an Event of Default for a period of one year after such notice is
received by the Company so long as the Company is diligently proceeding to
remedy such incorrectness;
(f) the Company consents to the appointment of or the
taking of possession by a receiver, trustee or liquidator in respect of a
substantial part of its property within the meaning of the Bankruptcy Code,
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;
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(g) the Company files a voluntary petition in bankruptcy
or a voluntary petition or an answer seeking reorganization, liquidation or
other relief as a debtor in a case under any bankruptcy laws or insolvency laws
(as in effect at such time) or an answer admitting the material allegations of a
petition filed against the Company as a debtor in any such case, or the Company
as a debtor seeks relief by voluntary petition, answer or consent, under the
provisions of any other bankruptcy or other similar law providing for the
reorganization or winding-up of corporations (as in effect at such time), or the
Company seeks an agreement, composition, extension or adjustment with its
creditors under such laws;
(h) an order, judgment or decree is entered by any court
of competent jurisdiction appointing, without the consent of the Company, a
receiver, trustee or liquidator of the Company or sequestering any substantial
part of its property, or granting any other relief in respect of the Company as
a debtor under any bankruptcy laws or insolvency laws (as in effect at such
time), and any such order, judgment or decree of appointment or sequestration
remains in force undismissed, unstayed or unvacated for a period of 90 days
after the date of entry thereof; or
(i) a petition against the Company as a debtor in a case
under the federal bankruptcy laws or other insolvency laws (as in effect at such
time) is filed and not withdrawn or dismissed within 90 days thereafter, or if,
under the provisions of any law providing for reorganization or winding-up of
corporations that may apply to the Company, any court of competent jurisdiction
assumes jurisdiction, custody or control of the Company or of any substantial
part of its property and such jurisdiction, custody or control remains in force
unrelinquished, unstayed or unterminated for a period of 90 days;
provided, however, that notwithstanding anything to the contrary contained in
this Section 4.01, any failure of the Company to perform or observe any
covenant, condition or agreement shall not constitute an Event of Default if
such failure arises by reason of an event referred to in the definition of
"Event of Loss" so long as the Company is continuing to comply with all of the
terms of Section 7.05.
Section 4.02 Remedies. (a) If an Event of Default has
occurred and is continuing and so long as the same shall continue unremedied,
then and in every such case the Loan Trustee may, and upon the written
instructions of a Majority in Interest of Noteholders, the Loan Trustee shall,
do one or more of the following to the extent permitted by, and subject to
compliance with the requirements of, applicable law then in effect (provided,
however, that during any period the Airframe or any Engine is subject to the
CRAF Program and is in possession of or being operated under the direction of
the United States government or an agency or instrumentality of the United
States, the Loan Trustee shall not, on account of any Event of Default, be
entitled to exercise or pursue any of the powers, rights or remedies described
in this Section 4.02 in such manner as to limit the Company's control under this
Indenture (or any Permitted Lessee's control under any Lease) of the Airframe or
such Engine, unless at least 60 days' (or such lesser period as may then be
applicable under the Military Airlift Command Program of the United States
government) prior written notice of default hereunder has been given by the Loan
Trustee by registered or certified mail to the Company (and any such Permitted
Lessee) with a copy addressed to the Contracting Office Representative or other
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appropriate person for the Military Airlift Command of the United States Air
Force under any contract with the Company (or such Permitted Lessee) relating to
the Aircraft):
(i) declare by written notice to the Company all the
Equipment Notes to be due and payable, whereupon the aggregate unpaid
principal amount of all Equipment Notes then outstanding, together with
accrued but unpaid interest thereon and other amounts due thereunder
(but without Make-Whole Amount), shall immediately become due and
payable without presentment, demand, protest or notice, all of which
are hereby waived; provided that if an Event of Default referred to in
Subsections 4.01(f), (g), (h) or (i) has occurred and is continuing,
then and in every such case the unpaid principal amount then
outstanding, together with accrued but unpaid interest and all other
amounts due thereunder (but without Make-Whole Amount) shall
immediately and without further act become due and payable without
presentment, demand, protest or other notice, all of which are hereby
waived; and, following such declaration or deemed declaration:
(ii) (A) cause the Company, upon the demand by notice of
the Loan Trustee, at the Company's expense, to deliver promptly, and
the Company shall deliver promptly, all or such part of the Airframe or
any Engine as the Loan Trustee so demands to the Loan Trustee or its
order, or, if the Company has failed to so deliver the Airframe or any
Engine after such demand, the Loan Trustee, at its option, may enter
upon the premises where all or any part of the Airframe or any Engine
are located and take immediate possession of and remove the same
together with any engine which is not an Engine but which is installed
on the Airframe, subject to all of the rights of the owner, lessor,
lienor or secured party of such engine; provided that the Airframe with
an engine (which is not an Engine) installed thereon may be flown or
returned only to a location within the continental United States, and
such engine shall be held for the account of any such owner, lessor,
lienor, secured party or, if such engine is owned by the Company, may
at the option of the Company with the consent of the Loan Trustee
(which will not be unreasonably withheld) or at the option of the Loan
Trustee with the consent of the Company (which will not be unreasonably
withheld), be exchanged with the Company for an Engine in accordance
with the provisions of Section 7.05(b); (B) sell all or any part of the
Airframe and any Engine at public or private sale, whether or not the
Loan Trustee at the time has possession thereof, as the Loan Trustee
may determine, or otherwise dispose of, hold, use, operate, lease to
others or keep idle all or any part of the Airframe or such Engine as
the Loan Trustee, in its sole discretion, determines, all free and
clear of any rights or claims of the Company, and the proceeds of such
sale or disposition shall be applied as set forth in Section 3.03; or
(C) exercise any other remedy of a secured party under the Uniform
Commercial Code of the State of New York (whether or not in effect in
the jurisdiction in which enforcement is sought).
Upon every such taking of possession of Collateral under this
Section 4.02, the Loan Trustee may, from time to time, at the expense of the
Collateral, make all such expenditures for maintenance, insurance, repairs,
alterations, additions and improvements to and of the Collateral as it deems
necessary to cause the Collateral to be in such condition as required by the
provisions of this Indenture. In each such case, the Loan Trustee may maintain,
use, operate, store, lease, control or manage the Collateral and to exercise all
rights and powers of the Company relating to the Collateral as the Loan Trustee
reasonably deems best, including the
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right to enter into any and all such agreements with respect to the maintenance,
use, operation, storage, leasing, control, management or disposition of the
Collateral or any part thereof as the Loan Trustee may reasonably determine; and
the Loan Trustee shall be entitled to collect and receive directly all tolls,
rents, revenues, issues, income, products and profits of the Collateral and
every part thereof. Such tolls, rents, revenues, issues, income, products and
profits shall be applied to pay the expenses of the use, operation, storage,
leasing, control, management or disposition of the Collateral, and of all
maintenance, repairs, replacements, alterations, additions and improvements, and
to make all payments that the Loan Trustee is required or elects to make, if
any, for Taxes, insurance or other proper charges assessed against or otherwise
imposed upon the Collateral or any part thereof, and all other payments which
the Loan Trustee is required or expressly authorized to make under any provision
of this Indenture, as well as just and reasonable compensation for the services
of the Loan Trustee, and shall otherwise be applied in accordance with Article
III. If an Event of Default has occurred and is continuing and the Equipment
Notes either have been accelerated pursuant to this Section 4.02 or have become
due at maturity and the Loan Trustee is entitled to exercise rights hereunder,
at the request of the Loan Trustee, the Company shall promptly execute and
deliver to the Loan Trustee such instruments of title and other documents as the
Loan Trustee reasonably deems necessary or advisable to enable the Loan Trustee
or an agent or representative designated by the Loan Trustee, at such time or
times and place or places as the Loan Trustee specifies, to obtain possession of
all or any part of the Collateral to which the Loan Trustee at the time is
entitled hereunder. If the Company for any reason fails to execute and deliver
such instruments and documents after such request by the Loan Trustee, the Loan
Trustee may obtain a judgment conferring on the Loan Trustee the right to
immediate possession and requiring the Company to execute and deliver such
instruments and documents to the Loan Trustee, to the entry of which judgment
the Company hereby specifically consents to the fullest extent it may lawfully
do so.
(b) The Loan Trustee shall give the Company at least 30
days' prior written notice of any public sale or of the date on or after which
any private sale will be held, which notice the Company hereby agrees to the
extent permitted by applicable law is reasonable notice. Any Noteholder or
Noteholders shall be entitled to bid for and become the purchaser of any
Collateral offered for sale pursuant to this Section 4.02 and to credit against
the purchase price bid at such sale by such Noteholders all or any part of the
unpaid amounts owing to such Noteholders under the Operative Documents and
secured by the Lien of this Indenture (but only to the extent that such purchase
price would have been paid to such Noteholders pursuant to Article III if such
purchase price were paid in cash and the foregoing provision of this Section
4.02(b) were not given effect). The Loan Trustee may exercise such right without
possession or production of the Equipment Notes or proof of ownership thereof,
and as a representative of the Noteholders may exercise such right without
notice to the Noteholders as parties to any suit or proceeding relating to the
foreclosure of any Collateral. The Company may also bid for and become the
purchaser of any Collateral offered for sale pursuant to this Section 4.02.
(c) To the extent permitted by applicable law, while an
Event of Default has occurred and is continuing, the Company irrevocably
appoints the Loan Trustee the true and lawful attorney-in-fact of the Company
(which appointment is coupled with an interest) in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Indenture, whether pursuant to
foreclosure or power of sale, or otherwise, to execute and deliver all such
bills of sale, assignments and other
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instruments as may be necessary or appropriate, with full power of substitution,
the Company hereby ratifying and confirming all that such attorney or any
substitute does by virtue hereof in accordance with applicable law; provided
that if so requested by the Loan Trustee or any purchaser, the Company shall
ratify and confirm any such sale, assignment or transfer of delivery, by
executing and delivering to the Loan Trustee or such purchaser all bills of
sale, assignments, releases and other proper instruments to effect such
ratification and confirmation as may be designated in any such request.
(d) At any time after the Loan Trustee has declared the
unpaid principal amount of all Equipment Notes then outstanding to be due and
payable and prior to the sale of any part of the Collateral pursuant to this
Article IV, a Majority in Interest of Noteholders, by written notice to the
Company and the Loan Trustee, may rescind and annul such declaration, whether
made by the Loan Trustee on its own accord or as directed, and its consequences
if: (i) there has been paid to or deposited with the Loan Trustee an amount
sufficient to pay all overdue installments of principal amount of, and interest
on, the Equipment Notes, and all other amounts owing under the Operative
Documents, that have become due otherwise than by such declaration of
acceleration and (ii) all other Events of Default, other than nonpayment of
principal amount or interest on the Equipment Notes that have become due solely
because of such acceleration, have been either cured or waived.
(e) Notwithstanding anything contained herein, so long as
the Pass Through Trustee under any Pass Through Trust Agreement or the
Subordination Agent on its behalf is a Noteholder, the Loan Trustee will not be
authorized or empowered to acquire title to any Collateral or take any action
with respect to any Collateral so acquired by it if such acquisition or action
would cause any Pass Through Trust to fail to qualify as a "grantor trust" for
federal income tax purposes.
Section 4.03 Remedies Cumulative. To the extent permitted
under applicable law, each and every right, power and remedy specifically given
to the Loan Trustee herein or otherwise in this Indenture shall be cumulative
and shall be in addition to every other right, power and remedy specifically
given herein or now or hereafter existing at law, in equity or by statute, and
each and every right, power and remedy whether specifically given herein or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Loan Trustee, and the exercise or the
beginning of the exercise of any power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by the Loan Trustee in the exercise of any
right, remedy or power or in the pursuance of any remedy shall, to the extent
permitted by applicable law, impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Company or to be an
acquiescence therein.
Section 4.04 Discontinuance of Proceedings. In case the
Loan Trustee has instituted any proceedings to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceedings have been discontinued or abandoned for any reason or have been
determined adversely to the Loan Trustee, then and in every such case the
Company and the Loan Trustee shall, subject to any determination in such
proceedings, be restored to their former positions and rights hereunder with
respect to the Collateral, and all
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rights, remedies and powers of the Loan Trustee shall continue as if no such
proceedings had been undertaken (but otherwise without prejudice).
Section 4.05 Waiver of Past Defaults. Upon written
instruction from a Majority in Interest of Noteholders, the Loan Trustee shall
waive any past default hereunder and its consequences, and upon any such waiver
such default shall cease to exist and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of the Operative Documents,
but no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon; provided, however, that in the absence of written
instructions from each of the affected Noteholders, the Loan Trustee shall not
waive any default (i) in the payment of the principal amount, Make-Whole Amount,
if any, or interest due under any Equipment Note then outstanding (other than
with the consent of the holder thereof), or (ii) in respect of a covenant or
provision hereof which, under Article IX, cannot be modified or amended without
the consent of each such affected Noteholder.
Section 4.06 Noteholders May Not Bring Suit Except Under
Certain Conditions. A Noteholder of any Series shall not have the right to
institute any suit, action or proceeding at law or in equity or otherwise with
respect to this Indenture for the appointment of a receiver or for the
enforcement of any other remedy under this Indenture, unless:
(1) such Noteholder previously shall have given written
notice to the Loan Trustee of a continuing Event of Default;
(2) A Majority in Interest of Noteholders shall have
requested the Loan Trustee in writing to institute such action, suit or
proceeding and shall have offered to the Loan Trustee indemnity as
provided in Section 5.03;
(3) the Loan Trustee shall have refused or neglected to
institute any such action, suit or proceeding for 60 days after receipt
of such notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request
shall have been given to the Loan Trustee during such 60-day period by
a Majority in Interest of Noteholders.
Except to the extent provided in the Intercreditor Agreement
or in any Indenture Supplement, it is understood and intended that no one or
more of the Noteholders of any Series shall have any right in any manner
whatsoever hereunder or under the Indenture Supplement or under the Equipment
Notes of such Series to (i) surrender, impair, waive, affect, disturb or
prejudice any Collateral, or the Lien of the Indenture on any Collateral, or the
rights of the Noteholders of such Series, (ii) obtain or seek to obtain priority
over or preference with respect to any other such Noteholder of such Series or
(iii) enforce any right under this Indenture, except in the manner provided in
this Indenture and for the equal, ratable and common benefit of all the
Noteholders of such Series subject to the provisions of this Indenture.
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ARTICLE V
DUTIES OF THE LOAN TRUSTEE
Section 5.01 Notice of Event of Default. If the Loan Trustee
has knowledge of an Event of Default or of a default arising from a failure by
the Company to pay when due any payment of principal amount, interest or
Make-Whole Amount, if any, due and payable under any Equipment Note, the Loan
Trustee shall promptly give notice thereof to the Company and each Noteholder;
provided, however, that except in the case of a default in the payment of the
principal amount, interest or Make-Whole Amount, if any, due and payable under
any Equipment Note, the Loan Trustee shall be protected in withholding the
notice to the Noteholders required in the foregoing part of this sentence if and
so long as the executive committee or trust committee of directors of the Loan
Trustee and/or trust officers thereof in good faith determine that withholding
such notice is in the interest of the Noteholders. Subject to the terms of
Sections 4.02, 4.05, 5.02 and 5.03, the Loan Trustee shall take such action, or
refrain from taking such action, with respect to such Event of Default
(including with respect to the exercise of any rights or remedies hereunder) as
the Loan Trustee is instructed in writing by a Majority in Interest of
Noteholders. Subject to the provisions of Section 5.03, if the Loan Trustee does
not receive instructions as above provided within 20 Business Days after giving
notice of such Event of Default to the Noteholders, the Loan Trustee may,
subject to instructions thereafter received pursuant to the preceding provisions
of this Section 5.01, take such action, or refrain from taking such action with
respect to such Event of Default as it reasonably determines to be advisable in
the best interests of the Noteholders, but shall be under no duty to take or
refrain from taking any action. It shall use the same degree of care and skill
in connection therewith as a prudent person would use under the circumstances in
the conduct of his or her own affairs. The Loan Trustee may not sell the
Airframe or any Engine without the consent of a Majority in Interest of
Noteholders.
For all purposes of this Indenture, in the absence of actual
knowledge, the Loan Trustee shall not be deemed to have knowledge of a default
or an Event of Default unless notified in writing by the Company or one or more
Noteholders; and "actual knowledge" (as used in the foregoing clause) of the
Loan Trustee shall mean actual knowledge of an officer in the Corporate Trust
Division of the Loan Trustee; provided, however, that the Loan Trustee is deemed
to have actual knowledge of (i) the failure of the Company to pay any principal
amount of, or interest on, the Equipment Notes directly to the Loan Trustee when
the same shall become due or (ii) the failure of the Company to maintain
insurance as required under Section 7.06 if the Loan Trustee receives written
notice thereof from an insurer or insurance broker.
Section 5.02 Action upon Instructions; Certain Rights and
Limitations. Subject to the terms of Article IV and this Article V, upon the
written instructions at any time of a Majority in Interest of Noteholders, the
Loan Trustee shall promptly (i) give such notice, direction, consent, waiver or
approval or exercise such right, remedy or power hereunder in respect of all or
any part of the Collateral or (ii) take such other action, as is specified in
such instructions.
The Loan Trustee will cooperate with the Company in connection
with the recording, filing, re-recording and refiling of the Indenture and any
supplements to it and any
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financing statements or other documents as is necessary to maintain the
perfection hereof or otherwise protect the security interests created hereby.
The Loan Trustee shall furnish to the Company upon request such information and
copies of such documents as the Loan Trustee may have and as are necessary for
the Company to perform its duties under Article II hereof.
Section 5.03 Indemnification. The Loan Trustee shall not be
required to take any action or refrain from taking any action under Sections
5.01 (other than the first sentence thereof) or 5.02 or Article IV unless it
shall have received indemnification against any risks incurred in connection
therewith in form and substance reasonably satisfactory to it, including,
without limitation, adequate advances against costs that may be incurred by it
in connection therewith. The Loan Trustee shall not be required to take any
action under Section 5.01 (other than the first sentence thereof) or 5.02 or
Article IV, nor shall any other provision of any Operative Document be deemed to
impose a duty on the Loan Trustee to take any action, if the Loan Trustee shall
have been advised by outside counsel that such action is contrary to the terms
hereof or is otherwise contrary to law.
Section 5.04 No Duties Except as Specified in Indenture or
Instructions. The Loan Trustee shall not have any duty or obligation to manage,
control, lease, use, sell, operate, store, dispose of or otherwise deal with the
Aircraft or any other part of the Collateral, or to otherwise take or refrain
from taking any action under, or in connection with, this Indenture, except as
expressly provided by the terms of this Indenture or the Participation Agreement
or as expressly provided in written instructions received pursuant to the terms
of Section 5.01 or 5.02; and no implied duties or obligations shall be read into
this Indenture against the Loan Trustee.
Section 5.05 No Action Except under Indenture or Instructions.
The Loan Trustee will not manage, control, use, sell, lease, operate, store,
dispose of or otherwise deal with the Aircraft or any other part of the
Collateral except in accordance with the powers granted to, or the authority
conferred upon, the Loan Trustee pursuant to this Indenture and in accordance
with the express terms hereof.
Section 5.06 Investment of Amounts Held by the Loan Trustee.
Any monies (including for the purpose of this Section 5.06 any cash deposited
with the Loan Trustee by the Company, any cash received by the Loan Trustee
pursuant to Sections 7.05(c) or 7.06(d) or otherwise) or Permitted Investments
purchased by the use of such cash pursuant to this Section 5.06 or any cash
constituting the proceeds of the maturity, sale or other disposition of any
Permitted Investments) held by the Loan Trustee hereunder as part of the
Collateral, until paid out by the Loan Trustee as herein provided, (i) subject
to clause (ii) below, may be carried by the Loan Trustee on deposit with itself
or on deposit to its account with any bank, trust company or national banking
association incorporated or doing business under the laws of the United States
or one of the states thereof having combined capital and surplus and retained
earnings of a least $100,000,000, and the Loan Trustee shall not have any
liability for interest upon any such monies except as otherwise agreed in
writing with the Company, or (ii) at any time and from time to time, so long as
no Event of Default shall have occurred and be continuing, at the request of the
Company, shall be invested and reinvested in Permitted Investments as specified
in such request (if such investments are reasonably available for purchase) and
sold, in any case at such prices, including accrued interest or its equivalent,
as are set forth in such request, and such Permitted Investments shall be held
by the Loan Trustee in trust as part of the Collateral until so
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sold; provided that the Company shall upon demand pay to the Loan Trustee the
amount of any loss realized upon maturity, sale or other disposition of any such
Permitted Investment and, so long as no Event of Default or Payment Default
shall have occurred and be continuing, the Company shall be entitled to receive
from the Loan Trustee, and the Loan Trustee shall promptly pay to the Company,
any profit, income, interest, dividend or gain realized upon maturity, sale or
other disposition of any Permitted Investment. If an Event of Default or Payment
Default shall have occurred and be continuing, any net income, profit, interest,
dividend or gain realized upon maturity, sale or other disposition of any
Permitted Investment shall be held as part of the Collateral and shall be
applied by the Loan Trustee at the same time, on the same conditions and in the
same manner as the amounts in respect of which such income, profit, interest,
dividend or gain was realized are required to be distributed in accordance with
the provisions hereof pursuant to which such amounts were required to be held.
The Loan Trustee shall not be responsible for any losses on any investments or
sales of Permitted Investments made pursuant to the procedure specified in this
Section 5.06 other than by reason of its willful misconduct or negligence. If
any moneys or investments are held by the Loan Trustee solely because an Event
of Default has occurred and is continuing and such moneys or investments have
been held for a period of 90 consecutive days during which such Event of Default
is continuing without any remedial action being taken by the Loan Trustee in
respect of such Event of Default pursuant to Section 4.02 hereof, and provided
that there is no stay, moratorium or injunction in effect preventing the taking
of such action, then, notwithstanding any other provision of the Operative
Documents, all such moneys and investments held by the Loan Trustee shall be
released to the Company on such 90th day, or on the next Business Day after such
90th day.
ARTICLE VI
THE LOAN TRUSTEE
Section 6.01 Acceptance of Trusts and Duties. State Street
accepts the trusts and duties hereby created and applicable to it and agrees to
perform such duties, but only upon the terms of this Indenture and agrees to
receive, handle and disburse all monies received by it as Loan Trustee
constituting part of the Collateral in accordance with the terms hereof. State
Street shall have no liability hereunder except (a) for its own willful
misconduct or negligence, (b) as provided in the fourth sentence of Section 2.03
and the penultimate sentence of Section 5.06, (c) for liabilities that may
result from the inaccuracy of any representation or warranty of State Street in
the Participation Agreement or expressly made hereunder and (d) as otherwise
expressly provided in the Operative Documents.
Section 6.02 Absence of Certain Duties. Except in accordance
with written instructions furnished pursuant to Sections 5.01, 5.02 or 6.06, and
except as provided in, and without limiting the generality of, Sections 5.02,
5.03 and 5.04, the Loan Trustee, shall have no duty (a) to see to any
registration of the Aircraft or any recording or filing of this Indenture or any
other document, or to see to the maintenance of any such registration, recording
or filing, (b) to see to any insurance on the Aircraft or to effect or maintain
any such insurance, whether or not the Company is in default with respect
thereto, (c) to confirm, verify or inquire into the failure to receive any
financial statements of the Company or (d) to inspect the Aircraft at any time
or
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ascertain or inquire as to the performance or observance of any of the Company's
covenants hereunder with respect to the Aircraft.
Section 6.03 No Representations or Warranties as to the
Documents. Except as provided in Article V of the Participation Agreement, the
Loan Trustee shall not be deemed to have made any representation or warranty as
to the validity, legality or enforceability of any Operative Document or any
other document or instrument, or as to the correctness of any statement (other
than a statement by the Loan Trustee) contained herein or therein, except that
the Loan Trustee hereby represents and warrants that each of said specified
documents to which it is a party has been or will be duly executed and delivered
by one of its officers who is and will be duly authorized to execute and deliver
such document on its behalf.
Section 6.04 No Segregation of Monies; No Interest. Subject to
Section 5.06 hereof, all moneys received by the Loan Trustee shall, until used
or applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law, and neither the Loan Trustee nor any
agent of the Loan Trustee shall be under any liability for interest on any
moneys received by it hereunder; provided, however, that any payments received,
or applied hereunder, by the Loan Trustee shall be accounted for by the Loan
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof.
Section 6.05 Reliance; Agents; Advice of Counsel. The Loan
Trustee shall not incur any liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper reasonably believed by it to be genuine
and reasonably believed by it to be signed by the proper party or parties. The
Loan Trustee may accept a copy of a resolution of the Board of Directors of any
party to the Participation Agreement, certified by the Secretary or an Assistant
Secretary of such party as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted and that the same
is in full force and effect. As to any fact or matter the manner of
ascertainment of which is not specifically described herein, the Loan Trustee
may for all purposes hereof rely on a certificate, signed by a duly authorized
officer of the Company, as to such fact or matter, and such certificate shall
constitute full protection to the Loan Trustee for any action taken or omitted
to be taken by it in good faith in reliance thereon. In the administration of
the trusts hereunder, the Loan Trustee may, with the consent of the Company
(such consent not to be unreasonably withheld), (a) execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through
agents (including paying agents or registrars) or attorneys, and (b) at the
expense of the Collateral, consult with counsel, accountants and other skilled
Persons to be selected and retained by it. The Loan Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance with
the advice or opinion of any such counsel, accountants or other skilled Persons
acting within such counsel's, accountants' or Person's area of competence (so
long as the Loan Trustee shall have exercised reasonable care and judgment in
selecting such Persons).
Section 6.06 Instructions from Noteholders. In the
administration of the trusts created hereunder, the Loan Trustee shall have the
right to seek instructions from a Majority in Interest of Noteholders should any
provision of this Indenture appear to conflict with any other provision herein
or any other Operative Document or Pass Through Document or should the
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Loan Trustee's duties or obligations hereunder be unclear, and the Loan Trustee
shall incur no liability in refraining from acting until it receives such
instructions. The Loan Trustee shall be fully protected for acting in accordance
with any instructions received under this Section 6.06.
ARTICLE VII
OPERATING COVENANTS OF THE COMPANY
Section 7.01 Liens. The Company will not directly or
indirectly create, incur, assume or suffer to exist any Lien on or with respect
to the Aircraft, its title thereto or any of its interest therein, except:
(a) the respective rights of the Loan Trustee and the
Company as provided in the Operative Documents, the Lien of this Indenture, the
rights of any Permitted Lessee under a Lease permitted hereunder and the rights
of any Person existing pursuant to the Operative Documents or the Pass Through
Documents;
(b) the rights of others under agreements or arrangements
to the extent expressly permitted by this Indenture;
(c) Loan Trustee Liens, Noteholder Liens and Other Party
Liens;
(d) Liens for Taxes either not yet due or payable or
being contested in good faith by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture or loss of
the Airframe or any Engine or the Loan Trustee's interest therein or materially
impair the Lien of this Indenture;
(e) materialmen's, mechanics', workers', repairmen's,
employees' or other like Liens arising in the ordinary course of business
(including those arising under maintenance agreements entered into in the
ordinary course of business) securing obligations that either are not yet
overdue for a period of more than 60 days or are being contested in good faith
by appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Airframe or any Engine or
the Loan Trustee's interest therein or materially impair the Lien of this
Indenture;
(f) Liens arising out of any judgment or award, so long
as such judgment is, within 60 days after the entry thereof, discharged, vacated
or reversed, or execution thereof stayed pending appeal or other judicial review
or is discharged, vacated or reversed within 60 days after the expiration of
such stay;
(g) any other Lien with respect to which the Company
provides a bond, cash collateral or other security adequate in the reasonable
opinion of the Loan Trustee;
(h) salvage or similar rights of insurers under insurance
policies maintained by the Company; and
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(i) Liens approved in writing by the Loan Trustee with
the consent of a Majority in Interest of the Noteholders.
Liens described in clauses (a) through (i) above are referred to herein as
"Permitted Liens". The Company shall promptly, at its own expense, take (or
cause to be taken) such action as may be necessary duly to discharge (by bonding
or otherwise) any Lien other than a Permitted Lien arising at any time with
respect to the Aircraft, its title thereto or any of its interest therein.
Section 7.02 Possession, Operation and Use, Maintenance and
Registration. (a) Possession. The Company shall not, without the prior written
consent of the Loan Trustee, lease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install any Engine, or
permit any Engine to be installed, on any airframe other than the Airframe;
provided that the Company may without the prior written consent of the Loan
Trustee:
(i) subject the Airframe to interchange agreements or
subject any Engine to interchange or pooling agreements or
arrangements, in each case entered into by the Company in the ordinary
course of its business; provided that (A) no such agreement or
arrangement contemplates or requires the transfer of title to the
Airframe and (B) if the Company's title to any such Engine is divested
under any such agreement or arrangement, such divestiture shall be
deemed to be an Event of Loss with respect to such Engine, and the
Company shall comply with Section 7.05(b) in respect thereof;
(ii) deliver possession of the Airframe or any Engine to
any Person for testing, service, repair, maintenance, overhaul work or
other similar purposes or for alterations, modifications or additions
to the Airframe or such Engine to the extent required or permitted by
the terms hereof;
(iii) transfer or permit the transfer of possession of the
Airframe or any Engine to any Government pursuant to a lease, contract
or other instrument;
(iv) subject the Airframe or any Engine to the CRAF
Program or transfer possession of the Airframe or any Engine to the
United States government in accordance with applicable laws, rulings,
regulations or orders (including, without limitation, any transfer of
possession pursuant to the CRAF Program); provided, that the Company
(A) shall promptly notify the Loan Trustee upon transferring possession
of the Airframe or any Engine pursuant to this clause (iv) and (B) in
the case of a transfer of possession pursuant to the CRAF Program,
shall notify the Loan Trustee of the name and address of the
responsible Contracting Office Representative for the Military Airlift
Command of the United States Air Force or other appropriate Person to
whom notices must be given and to whom requests or claims must be made
to the extent applicable under the CRAF Program;
(v) install an Engine on an airframe owned by the Company
(or any Permitted Lessee) free and clear of all Liens, except (A)
Permitted Liens and Liens that apply only to the engines (other than
Engines), appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such
airframe (but not to the airframe as an entirety) and (B) the rights of
third parties under
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interchange agreements or pooling or similar arrangements that would be
permitted under clause (i) above;
(vi) install an Engine on an airframe leased to the
Company (or any Permitted Lessee) or purchased or owned by the Company
(or any Permitted Lessee) subject to a conditional sale or other
security agreement; provided that: (A) such airframe is free and clear
of all Liens except (1) the rights of the parties to the lease or
conditional sale or other security agreement covering such airframe, or
their successors and assigns, and (2) Liens of the type permitted by
clause (v) of this Section 7.02(a); and (B) either: (1) the Company
shall have obtained from the lessor or secured party of such airframe a
written agreement (which may be the lease, conditional sale or other
security agreement covering such airframe), in form and substance
satisfactory to the Loan Trustee (it being understood that an agreement
from such lessor or secured party substantially in the form of the
final sentence of the penultimate paragraph of this Section 7.02(a)
shall be deemed to be satisfactory to the Loan Trustee), whereby such
lessor or secured party expressly agrees that neither it nor its
successors or assigns will acquire or claim any right, title or
interest in any Engine by reason of such Engine being installed on such
airframe at any time while such Engine is subject to the Lien of this
Indenture, or (2) such lease, conditional sale or other security
agreement provides that such Engine shall not become subject to the
Lien of such lease, conditional sale or other security agreement at any
time while such Engine is subject to the Lien of this Indenture,
notwithstanding the installation thereof on such airframe;
(vii) install an Engine on an airframe owned by the Company
(or any Permitted Lessee), leased to the Company (or any Permitted
Lessee) or purchased by the Company (or any Permitted Lessee) subject
to a conditional sale or other security agreement under circumstances
where neither clause (v) nor clause (vi) of this Section 7.02(a) is
applicable; provided that such installation shall be deemed an Event of
Loss with respect to such Engine, and the Company shall comply with
Section 7.05(b) in respect thereof, if such installation adversely
affects the Loan Trustee's security interest in such Engine, the Loan
Trustee not intending hereby to waive any right or interest it may have
to or in such Engine under applicable law until compliance by the
Company with Section 7.05(b);
(viii) lease any Engine or the Airframe and Engines to any
United States air carrier as to which there is in force a certificate
issued pursuant to the Transportation Code (49 U.S.C. Sections
41101-41112) or successor provision that gives like authority; and
(ix) lease any Engine or the Airframe and Engines to (A)
any foreign air carrier other than those set forth in clause (B), (B)
any foreign air carrier that is at the inception of the lease based in
and a domiciliary of a country listed in Exhibit B hereto and (C) any
foreign air carrier consented to in writing by the Loan Trustee with
the consent of a Majority in Interest of Noteholders; provided that (x)
in the case of a lease to a foreign air carrier under clause (A) above,
the Loan Trustee receives at the time of such lease (1) written
confirmation from each of the Rating Agencies that such lease would not
result in a reduction of the rating for any class of Pass Through
Certificates below the then current rating for such class of Pass
Through Certificates or a withdrawal or suspension of the
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rating of any class of Pass Through Certificates and (2) an opinion of
counsel to the Company (such counsel to be reasonably satisfactory to
the Loan Trustee) to the effect that there exist no possessory rights
in favor of the lessee under the laws of such lessee's country which
would, upon bankruptcy or insolvency of or other default by the Company
and assuming at such time such lessee is not insolvent or bankrupt,
prevent the taking of possession of any such Engine or the Airframe and
any such Engine by the Loan Trustee in accordance with and when
permitted by the terms of Section 4.02 upon the exercise by the Loan
Trustee of its remedies under Section 4.02, (y) in the case of a lease
to any foreign air carrier (other than a foreign air carrier
principally based in Taiwan), the United States maintains diplomatic
relations with the country in which such foreign air carrier is based
at the time such lease is entered into and (z) in the case of any lease
to a foreign air carrier, such carrier is not then subject to any
bankruptcy, insolvency, liquidation, reorganization, dissolution or
similar proceeding and shall not have substantially all of its property
in the possession of any liquidator, trustee, receiver or similar
person;
provided that the rights of any lessee or other transferee who receives
possession of the Aircraft, the Airframe or any Engine by reason of a transfer
permitted by this Section 7.02(a) (other than the transfer of an Engine which is
deemed an Event of Loss) shall be subject and subordinate to, and any permitted
lease shall be made expressly subject and subordinate to, all the terms of this
Indenture, including the Loan Trustee's rights to repossess pursuant to Section
4.02 and to avoid such lease upon such repossession, and the Company shall
remain primarily liable hereunder for the performance and observance of all of
the terms and conditions of this Indenture to the same extent as if such lease
or transfer had not occurred, any such lease shall include appropriate
provisions for the maintenance and insurance of the Aircraft, the Airframe or
such Engine, and no lease or transfer of possession otherwise in compliance with
this Section shall (x) result in any registration or re-registration of the
Aircraft except to the extent permitted in Section 7.02(e) or the maintenance,
operation or use thereof that does not comply with Section 7.02(b) and (c) or
(y) permit any action not permitted to be taken by the Company with respect to
the Aircraft hereunder. The Company shall promptly notify the Loan Trustee and
the Rating Agencies of the existence of any such lease with a term in excess of
one year.
The Loan Trustee, and each Noteholder by acceptance of an
Equipment Note, agrees, for the benefit of the lessor or secured party of any
airframe or engine leased to the Company (or any Permitted Lessee) or purchased
or owned by the Company (or any Permitted Lessee) subject to a conditional sale
or other security agreement, that the Loan Trustee and the Noteholders will not
acquire or claim, as against such lessor or secured party, any right, title or
interest in: (A) any engine or engines owned 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 at any time while such engine or engines
are subject to such lease or conditional sale or other security agreement, or
(B) any airframe owned 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
at any time while such airframe is subject to such lease or conditional sale or
other security agreement.
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The Loan Trustee acknowledges that any "wet lease" or other
similar arrangement under which the Company maintains operational control of the
Aircraft does not constitute a delivery, transfer or relinquishment of
possession for purposes of this Section 7.02(a).
(b) Operation and Use. The Company agrees that the
Aircraft will not be maintained, used or operated in violation of any law, rule
or regulation of any government of any country having jurisdiction over the
Aircraft or in violation of any airworthiness certificate, license or
registration relating to the Aircraft issued by any such government, except to
the extent the Company (or, if a Lease is then in effect, any Permitted Lessee)
is contesting in good faith the validity or application of any such law, rule or
regulation in any manner that does not involve any material risk of sale,
forfeiture or loss of the Aircraft or materially impair the Lien of this
Indenture; provided, that the Company shall not be in default under, or required
to take any action set forth in, this sentence if it is not possible for it to
comply with the laws of a jurisdiction other than the United States (or other
than any jurisdiction in which the Aircraft is then registered) because of a
conflict with the applicable laws of the United States (or such jurisdiction in
which the Aircraft is then registered). The Company will not operate the
Aircraft, or permit the Aircraft to be operated or located, (i) in any area
excluded from coverage by any insurance required by the terms of Section 7.06 or
(ii) in any war zone or recognized or, in the Company's judgment, threatened
areas of hostilities unless covered by war risk insurance in accordance with
Section 7.06, unless in the case of either clause (i) or (ii), (x)
indemnification complying with Section 7.06 (a) and (b) has been provided or (y)
the Aircraft is only temporarily located in such area as a result of an isolated
occurrence or isolated series of occurrences attributable to a hijacking,
medical emergency, equipment malfunction, weather conditions, navigational error
or other similar unforeseen circumstances and the Company is using its good
faith efforts to remove the Aircraft from such area as promptly as practicable.
(c) Maintenance. The Company shall maintain, service,
repair and overhaul the Aircraft (or cause the same to be done) so as to keep
the Aircraft in good operating condition and in such condition as may be
necessary to enable the airworthiness certification of the Aircraft to be
maintained in good standing at all times (other than during temporary periods of
storage, during maintenance or modification permitted hereunder, or during
periods of grounding by applicable governmental authorities) under the
Transportation Code, during such periods in which the Aircraft is registered
under the laws of the United States, or, if the Aircraft is registered under the
laws of any other jurisdiction, the applicable laws of such jurisdiction. In any
case, the Aircraft will be maintained in accordance with the maintenance
standards required by the FAA (while operated under an FAA-approved maintenance
program) or, while operated under the maintenance program of another
jurisdiction, standards substantially equivalent to those required by the
central aviation authority of Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand,
Norway, Spain, Sweden, Switzerland or the United Kingdom. The Company shall
maintain or cause to be maintained all records, logs and other documents
required to be maintained in respect of the Aircraft by appropriate authorities
in the jurisdiction in which the Aircraft is registered.
(d) Identification of Loan Trustee's Interest. The
Company agrees to affix as promptly as practicable after the Closing Date and
thereafter to maintain in the cockpit of the Aircraft, in a clearly visible
location, and (if not prevented by applicable law or regulations or by any
government) on each Engine, a nameplate bearing the inscription "MORTGAGED TO
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STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, AS
LOAN TRUSTEE" (such nameplate to be replaced, if necessary, with a nameplate
reflecting the name of any successor Loan Trustee).
(e) Registration. The Company shall cause the Aircraft to
remain duly registered, under the laws of the United States, in the name of the
Company except as otherwise required by the Transportation Code; provided that
the Loan Trustee shall, at the Company's expense, execute and deliver all such
documents as the Company may reasonably request for the purpose of continuing
such registration. Notwithstanding the preceding sentence, the Company, at its
own expense, may cause or allow the Aircraft to be duly registered under the
laws of any foreign jurisdiction in which a Permitted Lessee could be
principally based, in the name of the Company or of any nominee of the Company,
or, if required by applicable law, in the name of any other Person (and,
following any such foreign registration, may cause the Aircraft to be
re-registered under the laws of the United States); provided, that in the case
of jurisdictions other than those approved by the Loan Trustee with the consent
of a Majority in Interest of the Noteholders (i) if such jurisdiction is at the
time of registration listed on Exhibit B, the Loan Trustee shall have received
at the time of such registration an opinion of counsel to the Company to the
effect that (A) this Indenture and the Loan Trustee's right to repossession
thereunder is valid and enforceable under the laws of such country, (B) after
giving effect to such change in registration, the Lien of this Indenture shall
continue as a valid Lien and shall be duly perfected in the new jurisdiction of
registration and that all filing, recording or other action necessary to perfect
and protect the Lien of this Indenture has been accomplished (or if such opinion
cannot be given at such time, (x) the opinion shall detail what filing,
recording or other action is necessary and (y) the Loan Trustee shall have
received a certificate from a Responsible Officer of the Company that all
possible preparations to accomplish such filing, recording and other action
shall have been done, and such filing, recording and other action shall be
accomplished and a supplemental opinion to that effect shall be promptly
delivered to the Loan Trustee subsequent to the effective date of such change in
registration), (C) the obligations of the Company under this Indenture shall
remain valid, binding and (subject to customary bankruptcy and equitable
remedies exceptions and to other exceptions customary in foreign opinions
generally) enforceable under the laws of such jurisdiction (or the laws of the
jurisdiction to which the laws of such jurisdiction would refer as the
applicable governing law) and (D) all approvals or consents of any government in
such jurisdiction having jurisdiction required for such change in registration
shall have been duly obtained and shall be in full force and effect, and (ii) if
such jurisdiction is at the time of registration not listed on Exhibit B, the
Loan Trustee shall have received (in addition to the opinions set forth in
clause (i) above) at the time of such registration an opinion of counsel to the
Company to the effect that (A) the terms of this Indenture are legal, valid,
binding and enforceable in such jurisdiction (subject to exceptions customary in
such jurisdiction, provided, that, subject to exceptions relating to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and exceptions relating to general principles of equity,
such counsel shall opine that any applicable laws limiting the remedies provided
in Section 4.02 do not in the opinion of such counsel make the remedies provided
in Section 4.02 inadequate for the practical realization of the rights and
benefits provided thereby), (B) that it is not necessary for the Loan Trustee to
register or qualify to do business in such jurisdiction, (C) that there is no
tort liability of the lender of an aircraft not in possession thereof under the
laws of such jurisdiction other than tort liability that might have been imposed
on such lender under the laws of the United States or any
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state thereof (it being understood that such opinion shall be waived if
insurance reasonably satisfactory to the Loan Trustee is provided, at the
Company's expense, to cover such risk) and (D) (unless the Company shall have
agreed to provide insurance covering the risk of requisition of use or title of
the Aircraft by the government of such jurisdiction so long as the Aircraft is
registered under the laws of such jurisdiction) that the laws of such
jurisdiction require fair compensation by the government of such jurisdiction
payable in currency freely convertible into Dollars for the loss of use or title
of the Aircraft in the event of requisition by such government of such use or
title. The Loan Trustee will cooperate with the Company in effecting such
foreign registration. Notwithstanding the foregoing, prior to any such change in
the country of registry of the Aircraft, the following conditions shall be met
(or waived as provided in Section 6.01(b) of the Participation Agreement):
(i) no Event of Default shall have occurred and be
continuing at the effective date of the change in registration;
provided, that it shall not be necessary to comply with this condition
if the change in registration results in the registration of the
Aircraft under the laws of the United States or if a Majority in
Interest of Noteholders consents to such change in registration;
(ii) the Loan Trustee shall have received evidence of
compliance with the insurance provisions contained herein after giving
effect to such change in registration; and
(iii) the Company shall have paid or made provision
reasonably satisfactory to the Loan Trustee for the payment of all
reasonable expenses (including reasonable attorneys' fees) of the Loan
Trustee and the Noteholders in connection with such change in
registration.
Section 7.03 Inspection; Financial Information. (a)
Inspection. At all reasonable times, but upon at least 15 Business Days' prior
written notice to the Company, the Loan Trustee or its authorized representative
may, subject to the other conditions of this Section 7.03(a), inspect the
Aircraft and may inspect the books and records of the Company relating to the
maintenance of the Aircraft required to be maintained by the FAA or the
government of another jurisdiction in which the Aircraft is then registered;
provided, that (i) such Loan Trustee or its representative, as the case may be,
shall be fully insured at no cost to the Company in a manner satisfactory to the
Company with respect to any risks incurred in connection with any such
inspection or shall provide to the Company a written release satisfactory to the
Company with respect to such risks, (ii) any such inspection shall be during the
Company's normal business hours and subject to the safety, security and
workplace rules applicable at the location where such inspection is conducted
and any applicable governmental rules or regulations, (iii) any such inspection
of the Aircraft shall be a visual, walk-around inspection of the interior and
exterior of the Aircraft and shall not include opening any panels, bays or the
like without the Company's express consent, which consent the Company may in its
sole discretion withhold, and (iv) no exercise of such inspection right shall
interfere with the use, operation or maintenance of the Aircraft by, or the
business of, the Company and the Company shall not be required to undertake or
incur any additional liabilities in connection therewith. All information
obtained in connection with any such inspection of the Aircraft and of such
books and records shall be Confidential Information and shall be treated by the
Loan Trustee and its representatives
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in accordance with the provisions of Section 10.16. Any inspection pursuant to
this Section 7.03(a) shall be at the sole risk (including, without limitation,
any risk of personal injury or death) and expense of the Loan Trustee (or its
representative) making such inspection. Except during the continuance of an
Event of Default, all inspections by the Loan Trustee and its representatives
provided for under this Section 7.03(a) shall be limited to one inspection of
any kind contemplated by this Section 7.03(a) during any consecutive twelve
month period.
(b) Financial Information. So long as any of the
Equipment Notes remain unpaid, the Company agrees to furnish to the Loan Trustee
and the Liquidity Provider: (i) within 60 days after the end of each of the
first three quarterly periods in each fiscal year of the Company, either (x) a
consolidated balance sheet of the Company and its consolidated subsidiaries
prepared by it as of the close of such period, together with the related
consolidated statements of income for such period or (y) a report of the Company
on Form 10-Q in respect of such period in the form filed with the Securities and
Exchange Commission and (ii) within 120 days after the close of each fiscal year
of the Company, either (x) a consolidated balance sheet of the Company and its
consolidated subsidiaries as of the close of such fiscal year, together with the
related consolidated statements of income for such fiscal year, certified by
independent public accountants, or (y) a report of the Company on Form 10-K in
respect of such year in the form filed with the Securities and Exchange
Commission. The Company may fulfill the requirements of this Section 7.03(b) by
providing the material described above in an electronic format by electronic
mail or accessible over the Internet.
Section 7.04 Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution of Engines. (a) Replacement of Parts.
The Company shall promptly replace or cause to be replaced all Parts that may
from time to time be incorporated or installed in or attached to the Airframe or
any Engine and that may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or rendered permanently
unfit for use for any reason whatsoever, except as otherwise provided in Section
7.04(c) or if the Airframe or an Engine to which a Part relates has suffered an
Event of Loss. In addition, the Company (or any Permitted Lessee) may remove in
the ordinary course of maintenance, service, repair, overhaul or testing, any
Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged beyond repair or rendered permanently unfit for use; provided that the
Company (or any Permitted Lessee), except as otherwise provided in Section
7.04(c), will replace such Parts as promptly as practicable. All replacement
Parts shall be free and clear of all Liens (except for Permitted Liens and
except in the case of replacement property temporarily installed on an emergency
basis) and shall be in the condition and repair required to be maintained by the
terms hereof. Except as otherwise provided in Section 7.04(c), all Parts at any
time removed from the Airframe or any Engine shall remain subject to the Lien of
this Indenture no matter where located until such time as such Parts shall be
replaced by parts that have been incorporated or installed in or attached to the
Airframe or such Engine and that meet the requirements for replacement Parts
specified above. Immediately upon any replacement Part becoming incorporated or
installed in or attached to the Airframe or any Engine as above provided (except
in the case of replacement property temporarily installed on an emergency
basis), without further act, (i) the replaced Part shall thereupon be free and
clear of all rights of the Loan Trustee and of the Lien of this Indenture and
shall no longer be deemed a Part hereunder, and (ii) such replacement Part shall
become subject to the Lien of this Indenture and be deemed a Part of the
Airframe or such Engine for all purposes to the same extent as the Parts
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originally incorporated or installed in or attached to the Airframe or such
Engine. Upon request of the Company from time to time, the Loan Trustee shall
execute and deliver to the Company an appropriate instrument confirming the
release of any such replaced Part from the Lien of this Indenture.
(b) Pooling of Parts. Any Part removed from the Airframe
or any Engine as provided in Section 7.04(a) may be subjected by the Company or
a Person permitted to be in possession of the Aircraft to a pooling arrangement
entered into in the ordinary course of the Company's or such Person's business;
provided that the part replacing such removed Part shall be incorporated or
installed in or attached to the Airframe or such Engine in accordance with
Section 7.04(a) as promptly as practicable after the removal of such removed
Part. In addition, any replacement Part when incorporated or installed in or
attached to the Airframe or any Engine may be owned by any third party subject
to such a pooling arrangement; provided that the Company, at its expense, as
promptly thereafter as practicable either (i) causes title to such replacement
Part to vest in the Company free and clear of all Liens (except Permitted
Liens), or (ii) replaces such replacement Part by incorporating or installing in
or attaching to the Airframe or such Engine a further replacement Part in the
manner contemplated by Section 7.04(a).
(c) Alterations, Modifications and Additions. The Company
will make (or cause to be made) such alterations and modifications in and
additions to the Airframe and the Engines as may be required from time to time
to meet the applicable requirements of the FAA or any applicable government of
any other jurisdiction in which the Aircraft may then be registered; provided,
however, that the Company (or, if a Lease is then in effect, any Permitted
Lessee) may, in good faith, contest the validity or application of any such
requirement in any manner that does not involve any material risk of sale, loss
or forfeiture of the Aircraft and does not materially adversely affect the Loan
Trustee's interest in the Aircraft. In addition, the Company (or any Permitted
Lessee), at its own expense, may from time to time add further parts or
accessories and make or cause to be made such alterations and modifications in
and additions to the Airframe or any Engine as the Company (or any Permitted
Lessee) may deem desirable in the proper conduct of its business, including,
without limitation, removal (without replacement) of Parts, provided that no
such alteration, modification or addition shall materially diminish the value or
utility of the Airframe or such Engine below its value or utility, immediately
prior to such alteration, modification or addition, assuming that the Airframe
or such Engine was then in the condition required to be maintained by the terms
of this Indenture, except that the value (but not the utility) of the Airframe
or any Engine may be reduced by the value of any such Parts that are removed
that the Company deems obsolete or no longer suitable or appropriate for use on
the Airframe or any Engine. All Parts incorporated or installed in or attached
or added to the Airframe or any Engine as the result of such alteration,
modification or addition shall, without further act, be subject to the Lien of
this Indenture. Notwithstanding the foregoing, the Company (or any Permitted
Lessee) may, at any time, remove any Part from the Airframe or any Engine if
such Part: (i) is in addition to, and not in replacement of or substitution for,
any Part originally incorporated or installed in or attached to the Airframe or
such Engine at the time of delivery thereof to the Company or any Part in
replacement of, or substitution for, any such Part, (ii) is not required to be
incorporated or installed in or attached or added to the Airframe or such Engine
pursuant to the first sentence of this Section 7.04(c) or (iii) can be removed
from the Airframe or such Engine without materially diminishing the value or
utility required to be maintained by the terms of this Indenture that the
Airframe or such Engine would have had at
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such time had such removal not occurred. Upon the removal by the Company (or any
Permitted Lessee) of any Part as permitted by this Section 7.04(c), such removed
Part shall, without further act, be free and clear of all rights and interests
of the Loan Trustee and the Lien of this Indenture and shall no longer be deemed
a Part hereunder. Upon request of the Company from time to time, the Loan
Trustee shall execute and deliver to the Company an appropriate instrument
confirming the release of any such removed Part from the Lien of this Indenture.
(d) Substitution of Engines. The Company shall have the
right at its option at any time, on at least 30 days' prior written notice to
the Loan Trustee, to substitute a Replacement Engine for any Engine. In such
event, and prior to the date of such substitution, the Company shall replace
such Engine by complying with the terms of Section 7.05(b) to the same extent as
if an Event of Loss had occurred with respect to such Engine.
Section 7.05 Loss, Destruction or Requisition. (a) Event of
Loss with Respect to the Airframe. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines then installed thereon,
the Company shall as soon as practicable (and, in any event, within 30 days
after an Event of Loss has occurred) notify the Loan Trustee of such Event of
Loss, and, within 90 days after such Event of Loss, the Company shall give the
Loan Trustee written notice of its election to perform one of the following
options (it being agreed that if the Company has not given such notice of
election within such 90-day period, the Company shall be deemed to have elected
to perform the option set forth in the following clause (ii)). The Company may
elect either to:
(i) substitute, on or before the Loss Payment Date (as
defined below), as replacement for the Airframe or Airframe and Engines
with respect to which an Event of Loss has occurred, a Replacement
Airframe (together with a number of Replacement Engines equal to the
number of Engines, if any, with respect to which the Event of Loss
occurred), such Replacement Airframe and Replacement Engines to be
owned by the Company free and clear of all Liens (other than Permitted
Liens); provided that if the Company shall not perform its obligation
to effect such substitution under this clause (i) on or prior to the
Loss Payment Date, then the Company shall on the Loss Payment Date
prepay the Equipment Notes in full in accordance with Section 2.10; or
(ii) redeem, on or before the Loss Payment Date, the
Equipment Notes in full in accordance with Section 2.10. The Company
shall give the Loan Trustee 20 days prior written notice if it elects
to redeem the Equipment Notes on any day prior to the Loss Payment
Date.
The "Loss Payment Date" with respect to an Event of Loss means
the Business Day next succeeding the 120th day following the date of occurrence
of such Event of Loss.
If the Company elects to substitute a Replacement Airframe (or
a Replacement Airframe and one or more Replacement Engines, as the case may be)
the Company shall, at its sole expense, not later than the Loss Payment Date,
(A) cause an Indenture Supplement for such Replacement Airframe and Replacement
Engines, if any, to be delivered to the Loan Trustee for execution and, upon
such execution, to be filed for recordation pursuant to the Transportation Code
or the applicable laws of such other jurisdiction in which the Aircraft may then
be
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registered, (B) cause a financing statement or statements with respect to the
Replacement Airframe and Replacement Engines, if any, or other requisite
documents or instruments to be filed in such place or places as necessary in
order to perfect the Loan Trustee's interest therein in the United States, or in
any other jurisdiction in which the Aircraft may then be registered, (C) furnish
the Loan Trustee with an opinion of the Company's counsel (which may be internal
counsel of the Company) addressed to the Loan Trustee to the effect that upon
such replacement, such Replacement Airframe and Replacement Engines, if any,
will be subject to the Lien of this Indenture and addressing the matters set
forth in clauses (A) and (B), (D) furnish the Loan Trustee with a certificate of
an independent aircraft engineer or appraiser, certifying that the Replacement
Airframe and Replacement Engines, if any, have a value and utility (without
regard to hours or cycles) at least equal to the Airframe and Engines, if any,
so replaced, assuming the Airframe and such Engines were in the condition and
repair required by the terms hereof immediately prior to the occurrence of such
Event of Loss, (E) furnish the Loan Trustee with evidence of compliance with the
insurance provisions of Section 7.06 with respect to such Replacement Airframe
and Replacement Engines, if any, and (F) furnish the Loan Trustee with an
opinion of the Company's counsel (which may be internal counsel of the Company)
to the effect that the Loan Trustee will be entitled to the benefits of Section
1110 with respect to the Replacement Airframe, provided that (i) such opinion
need not be delivered to the extent that the benefits of Section 1110 were not,
by reason of a change in law or governmental or judicial interpretation thereof,
available to the Loan Trustee with respect to the Aircraft immediately prior to
such substitution and (ii) such opinion may contain qualifications and
assumptions of the tenor contained in the Section 1110 opinion of the Company's
special counsel delivered pursuant to Section 3.01 of the Participation
Agreement on the Closing Date and such other qualifications and assumptions as
shall at the time be customary in opinions rendered in comparable circumstances.
In the case of each Replacement Airframe or Replacement
Airframe and one or more Replacement Engines subjected to the Lien of this
Indenture under this Section 7.05(a), promptly upon the recordation of the
Indenture Supplement covering such Replacement Airframe and Replacement Engines,
if any, pursuant to the Transportation Code (or pursuant to the applicable law
of such other jurisdiction in which such Replacement Airframe and Replacement
Engines, if any, are registered), the Company will cause to be delivered to the
Loan Trustee a favorable opinion of FAA counsel selected by the Company if at
the time of the Event of Loss the Aircraft was registered under the laws of the
United States (or, if at the time of the Event of Loss the Aircraft was
registered under the laws of another jurisdiction, counsel qualified to opine on
matters of registration in such jurisdiction selected by the Company, which
counsel shall be reasonably satisfactory to the Loan Trustee) addressed to the
Loan Trustee as to the due registration of such Replacement Aircraft and the due
recordation of such Indenture Supplement or such other requisite documents or
instruments and the validity and perfection of the security interest in the
Replacement Aircraft granted to the Loan Trustee under this Indenture.
For all purposes hereof, upon the attachment of the Lien of
this Indenture thereto, the Replacement Aircraft and Replacement Engines, if
any, shall become part of the Collateral, the Replacement Airframe shall be
deemed an "Airframe" as defined herein, and each such Replacement Engine shall
be deemed an "Engine" as defined herein. Upon compliance with clauses (A)
through (F) of the third paragraph of this Section 7.05(a), the Loan Trustee
shall
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execute and deliver to the Company an appropriate instrument releasing
such replaced Airframe and Engines (if any) installed thereon at the time such
Event of Loss occurred, all proceeds (including, without limitation, insurance
proceeds), the Warranty Rights in respect of such replaced Airframe and Engines
(if any) and all rights relating to the foregoing, from the Lien of this
Indenture and assigning to the Company all claims against third Persons for
damage to or loss of the Airframe and Engines arising from the Event of Loss.
If, after an Event of Loss, the Company performs the option
set forth in clause (ii) of the first paragraph of this Section 7.05(a), the
Loan Trustee shall execute and deliver to the Company an appropriate instrument
releasing the Aircraft, all proceeds (including, without limitation, insurance
proceeds), the Warranty Rights in respect of the Aircraft and all rights
relating to the foregoing from the Lien of this Indenture and assigning to the
Company all claims against third Persons for damage to or loss of the Aircraft
arising from the Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe, the
Company shall give the Loan Trustee prompt written notice thereof and shall,
within 120 days after the occurrence of such Event of Loss, cause to be
subjected to the Lien of this Indenture, as replacement for the Engine with
respect to which such Event of Loss occurred, a Replacement Engine free and
clear of all Liens (other than Permitted Liens).
Prior to or at the time of any replacement under this Section
7.05(b), the Company will (i) cause an Indenture Supplement covering such
Replacement Engine to be delivered to the Loan Trustee for execution and, upon
such execution, to be filed for recordation pursuant to the Transportation Code
or the applicable laws of any other jurisdiction in which the Aircraft may be
registered, (ii) cause a financing statement or statements with respect to such
Replacement Engine or other requisite documents or instruments to be filed in
such place or places as necessary in order to perfect the Loan Trustee's
interest therein in the United States, or in such other jurisdiction in which
the Engine may then be registered, (iii) furnish the Loan Trustee with an
opinion of the Company's counsel (which may be internal counsel to the Company)
addressed to the Loan Trustee to the effect that, upon such replacement, the
Replacement Engine will be subject to the Lien of this Indenture, (iv) furnish
the Loan Trustee with a certificate of an aircraft engineer or appraiser (who
may be an employee of the Company) certifying that such Replacement Engine has a
value and utility (without regard to hours or cycles) at least equal to the
Engine so replaced assuming such Engine was in the condition and repair required
by the terms hereof immediately prior to the occurrence of such Event of Loss
and (v) furnish the Loan Trustee with evidence of compliance with the insurance
provisions of Section 7.06 with respect to such Replacement Engine. In the case
of each Replacement Engine subjected to the Lien of this Indenture under this
Section 7.05(b), promptly upon the recordation of the Indenture Supplement
covering such Replacement Engine pursuant to the Transportation Code (or
pursuant to the applicable law of such other jurisdiction in which the Aircraft
is registered), the Company will cause to be delivered to the Loan Trustee an
opinion of FAA counsel selected by the Company if at the time of the Event of
Loss the Aircraft was registered under the laws of the United States (or, if at
the time of the Event of Loss the Aircraft was registered under the laws of
another jurisdiction, counsel qualified to opine on matters of registration in
such jurisdiction selected by the Company, which counsel shall be reasonably
satisfactory to the Loan Trustee)
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addressed to the Loan Trustee as to the due recordation of such Indenture
Supplement or such other requisite documents or instruments and the validity and
perfection of the security interest in the Replacement Engine granted to the
Loan Trustee under this Indenture. For all purposes hereof, upon the attachment
of the Lien of this Indenture thereto, the Replacement Engine shall become part
of the Collateral and shall be deemed an "Engine" as defined herein. Upon
compliance with clauses (i) through (v) of the first sentence of this paragraph,
the Loan Trustee shall execute and deliver to the Company an appropriate
instrument releasing such replaced Engine, any proceeds (including, without
limitation, insurance proceeds), the Warranty Rights in respect of such replaced
Engine and all rights relating to any of the foregoing from the Lien of this
Indenture and assigning to the Company all claims against third Persons for
damage to or loss of such Engine arising from the Event of Loss.
(c) Application of Payments for Event of Loss from
Requisition of Title or Use. Any payments other than insurance proceeds (the
application of which is provided for in Section 7.06) received at any time by
the Company or by the Loan Trustee from any government or other Person with
respect to an Event of Loss to the Airframe or any Engine, will be applied as
follows:
(i) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe that
has been or is being replaced by the Company pursuant to Section
7.05(a), such payments shall be paid over to, or retained by, the Loan
Trustee and upon completion of such replacement shall be paid over to,
or retained by, the Company;
(ii) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe that
has not been and will not be replaced pursuant to Section 7.05(a), so
much of such payments remaining after reimbursement of the Loan Trustee
for costs and expenses that shall not exceed the amounts required to be
paid to the Noteholders pursuant to Section 2.10 shall be applied in
reduction of the Company's obligation to pay such amounts, if not
already paid by the Company, or, if already paid by the Company, shall
be applied to reimburse the Company for its payment of such amount and
the balance, if any, of such payment remaining thereafter will be paid
over to, or retained by, the Company; and
(iii) if such payments are received with respect to an
Engine with regard to which an Event of Loss has occurred as
contemplated by Section 7.05(b), so much of such payments remaining
after reimbursement of the Loan Trustee for costs and expenses shall be
paid over to, or retained by, the Company; provided that the Company
has fully performed its obligations under Section 7.05(b) with respect
to the Event of Loss for which such payments are made.
(d) Requisition for Use by the Government of the Airframe
and the Engines Installed Thereon. In the event of the requisition for use by
any government (it being acknowledged that the use of the Airframe or any Engine
pursuant to the CRAF Program does not constitute such a requisition) of the
Airframe and the Engines or engines installed on the Airframe that does not
constitute an Event of Loss, all of the Company's rights and obligations under
this Indenture with respect to the Airframe and such Engines shall continue to
the same
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extent as if such requisition had not occurred; provided that, notwithstanding
the foregoing, the Company's obligations other than payment obligations shall
only continue to the extent feasible. All payments received by the Company or
the Loan Trustee from such government for such use of the Airframe and Engines
or engines shall be paid over to, or retained by, the Company.
(e) Requisition for Use by the Government of an Engine
not Installed on the Airframe. In the event of the requisition for use by any
government of any Engine not then installed on the Airframe for a period in
excess of sixty (60) days, the Company will replace such Engine by complying
with the terms of Section 7.05(b) to the same extent as if an Event of Loss had
occurred with respect to such Engine. Upon such replacement, any payments
received by the Company or the Loan Trustee from such government with respect to
such requisition shall be paid over to, or retained by, the Company.
(f) Application of Payments During Existence of Event of
Default. Any amount referred to in Section 7.05 that is payable to or retainable
by the Company shall not be paid to or retained by the Company if at the time of
such payment or retention an Event of Default or Payment Default shall have
occurred and be continuing, but shall be held by or paid over to the Loan
Trustee as security for the obligations of the Company under this Indenture. At
such time as there shall not be continuing any such Event of Default or Payment
Default, such amount shall be paid to the Company.
Section 7.06 Insurance. (a) Aircraft Liability Insurance. (i)
Except as provided in clause (ii) of this subsection (a), and subject to the
rights of the Company to establish and maintain self-insurance in the manner and
to the extent specified in Section 7.06(c), the Company will carry, or cause to
be carried, at no expense to the Loan Trustee, aircraft liability insurance
(including, but not limited to, bodily injury, personal injury and property
damage liability, exclusive of manufacturer's product liability insurance) and
contractual liability insurance with respect to the Aircraft (A) in amounts that
are not less than the aircraft liability insurance applicable to similar
aircraft and engines in the Company's fleet on which the Company carries
insurance; provided that such liability insurance shall not be less than the
amount certified in the insurance report delivered to the Loan Trustee on the
Closing Date, (B) of the type covering the same risks as from time to time
applicable to aircraft operated by the Company (or, if a Lease is then in
effect, by the Permitted Lessee) of the same type as the Aircraft, and (C) that
is maintained in effect with insurers of recognized responsibility. Any policies
of insurance carried in accordance with this Section 7.06(a) and any policies
taken out in substitution or replacement for any of such policies shall: (A)
name the Loan Trustee, the Subordination Agent, each Pass Through Trustee and
the Liquidity Provider as their Interests (as defined below in this Section
7.06) may appear, as additional insured (the "Additional Insureds"), (B) subject
to the condition of clause (C) below, provide that, in respect of the interest
of the Additional Insureds in such policies, the insurance shall not be
invalidated by any action or inaction of the Company and shall insure the
Additional Insureds' Interests as they appear, regardless of any breach or
violation of any warranty, declaration or condition contained in such policies
by the Company, (C) provide that, if such insurance is canceled for any reason
whatever, or if any change is made in the policy that materially reduces the
amount of insurance or the coverage certified in the insurance report delivered
on the Closing Date to the Loan Trustee and the Liquidity Provider, or if such
insurance is allowed to lapse for nonpayment of premium, such cancellation,
change or lapse shall not be effective as to any Additional Insured
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for 30 days (seven days, or such other period as is then generally available in
the industry, in the case of any war risk or allied perils coverage) after
receipt by such Additional Insured of written notice from such insurers of such
cancellation, change or lapse, (D) provide that the Additional Insureds shall
have no obligation or liability for premiums, commissions, assessments or calls
in connection with such insurance, (E) provide that the insurers shall waive any
rights of (1) set-off, counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of the Additional Insureds
to the extent of any moneys due to the Additional Insureds and (2) subrogation
against the Additional Insureds to the extent that the Company has waived its
rights by its agreements to indemnify the Additional Insureds pursuant to the
Operative Documents, (F) be primary without right of contribution from any other
insurance that may be carried by each Additional Insured with respect to its
Interests as such in the Aircraft and (G) expressly provide that all of the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured. "Interests" as
used in this Section 7.06(a) and in Section 7.06(b) with respect to any Person
means the interests of such Person in the transactions contemplated by the
Operative Documents. In the case of a lease or contract with any government in
respect of the Aircraft or any Engine, or in the case of any requisition for use
of the Aircraft or any Engine by any government, a valid agreement by such
government to indemnify the Company, or an insurance policy issued by such
government, against any of the risks that the Company is required hereunder to
insure against shall be considered adequate insurance for purposes of this
Section 7.06(a) to the extent of the risks (and in the amounts) that are the
subject of such indemnification or insurance.
(ii) During any period that the Airframe or an Engine, as
the case may be, is on the ground and not being flown, the Company may carry or
cause to be carried as to such non-flown Airframe or Engine, in lieu of the
insurance required by clause (i) above, and subject to self-insurance to the
extent permitted by Subsection 7.06(c), insurance otherwise conforming with the
provisions of said clause (i) except that: (A) the amounts of coverage shall not
be required to exceed the amounts of airline liability insurance from time to
time applicable to airframes or engines owned or leased by the Company (or, if a
Lease is then in effect, by the Permitted Lessee) of the same type as such
non-flown Airframe or Engine and that are on the ground and not being flown and
(B) the scope of the risks covered and the type of insurance shall be the same
as from time to time shall be applicable to airframes or engines operated by the
Company (or, if a Lease is then in effect, by the Permitted Lessee) of the same
type as such non-flown Airframe or Engine and that are on the ground and not
being flown.
(b) Insurance Against Loss or Damage to Aircraft. (i)
Except as provided in clause (ii) of this subsection (b), and subject to the
rights of the Company to establish and maintain self-insurance in the manner and
to the extent specified in Section 7.06(c), the Company shall maintain, or cause
to be maintained, in effect with insurers of recognized responsibility, at no
expense to the Loan Trustee, all-risk aircraft hull insurance covering the
Aircraft and all-risk coverage with respect to any Engines or Parts while
removed from the Aircraft (including, without limitation, war risk insurance if
and to the extent the same is maintained by the Company (or, if a Lease is then
in effect, by the Permitted Lessee) with respect to other similar aircraft
operated by the Company or such Permitted Lessee, as the case may be, on the
same routes) that is of the type as from time to time applicable to the aircraft
operated by the Company (or, if a Lease is then in effect, by the Permitted
Lessee) of the same type as the Aircraft; provided that (A) such insurance
(including the permitted self-insurance)
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shall at all times while the Aircraft is subject to this Indenture be for an
amount not less than 110% of the aggregate outstanding principal amount of the
Equipment Notes from time to time, (B) such insurance need not cover an Engine
while attached to an airframe not owned, leased or operated by the Company, and
(C) such insurance covering Engines and Parts removed from an Airframe or an
airframe or (in the case of Parts) an Engine need be obtained only to the extent
available at reasonable cost (as reasonably determined by the Company). Any
policies carried in accordance with this Section 7.06(b) and any policies taken
out in substitution or replacement for any such policies shall: (A) provide that
any insurance proceeds up to an amount equal to the outstanding principal amount
of the Equipment Notes, together with accrued but unpaid interest thereon, plus
an amount equal to the interest that would accrue on the outstanding principal
amount of the Equipment Notes at the Debt Rate in effect on the date of payment
of such insurance proceeds to the Loan Trustee (as provided for in this
sentence) during the period commencing on the day following the date of such
payment to the Loan Trustee and ending on the Loss Payment Date (the sum of such
three amounts being the "Loan Amount"), payable for any loss or damage
constituting an Event of Loss with respect to the Aircraft and any insurance
proceeds in excess of the amount set forth on Exhibit C up to the amount of the
Loan Amount for any loss or damage to the Aircraft (or Engines) not constituting
an Event of Loss with respect to the Aircraft (or Engines), shall be paid to the
Loan Trustee as long as the Indenture shall not have been discharged, and that
all other amounts shall be payable to the Company, unless the insurer shall have
received notice that an Event of Default exists, in which case all insurance
proceeds for any loss or damage to the Aircraft (or Engines) up to the Loan
Amount shall be payable to the Loan Trustee, (B) subject to the conditions of
clause (C) below, provide that, in respect of the interests of the Additional
Insureds in such policies, the insurance shall not be invalidated by any action
or inaction of the Company and shall insure the Additional Insureds' Interests
as they appear, regardless of any breach or violation by the Company of any
warranty, declaration or condition contained in such policies, (C) provide that
if such insurance is canceled for any reason whatsoever, or if any change is
made in the insurance that materially reduces the coverage (not including the
amount) certified in the insurance report delivered on the Closing Date to the
Loan Trustee and the Liquidity Provider or if such insurance is allowed to lapse
for nonpayment of premium, such cancellation, change or lapse shall not be
effective as to the Additional Insureds for 30 days (seven days, or such other
period as is customarily available in the industry, in the case of war risk or
allied perils coverage) after receipt by the Additional Insureds of written
notice from such insurers of such cancellation, change or lapse, (D) provide
that the Additional Insureds shall have no obligation or liability for premiums,
commissions, assessments or calls in connection with such insurance, (E) provide
that the insurers shall waive rights of (1) setoff, counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability of
the Additional Insureds to the extent of any moneys due to the Additional
Insureds and (2) subrogation against the Additional Insureds to the extent the
Company has waived its rights by its agreement to indemnify the Additional
Insureds pursuant to the Operative Documents and (F) be primary without right of
contribution from any other insurance that may be carried by any Additional
Insured with respect to its Interests as such in the Aircraft. In the case of a
lease or contract with any government in respect of the Aircraft or any Engine,
or in the case of any requisition for use of the Aircraft or any Engine by any
government, a valid agreement by such government to indemnify the Company, or an
insurance policy issued by such government, against any risks which the Company
is required hereunder to
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insure against shall be considered adequate insurance for purposes of this
Section 7.06(b) to the extent of the risks (and in the amounts) that are the
subject of such indemnification or insurance.
(ii) During any period that the Airframe or an Engine is
on the ground and not being flown, the Company may carry or cause to be carried
as to such non-flown Airframe or Engine, in lieu of the insurance required by
clause (i) above, and subject to self-insurance to the extent permitted by
Subsection 7.06(c), insurance otherwise conforming with the provisions of said
clause (i) except that the scope of the risks covered and the type of insurance
shall be the same as from time to time applicable to airframes and engines
operated by the Company (or, if a Lease is then in effect, by the Permitted
Lessee) of the same type as such non-flown Airframe or Engine and that are on
the ground and not being flown; provided that, subject to self-insurance to the
extent permitted by Subsection 7.06(c), the Company shall maintain or cause to
be maintained insurance against risk of loss or damage to such non-flown
Airframe or Engine in an amount at least equal to 110% of the aggregate
outstanding principal amount of the Equipment Notes during such period that such
Airframe or Engine is on the ground and not being flown.
(c) Self-Insurance. The Company may from time-to-time
self-insure, by way of deductible, self-insured retention, premium adjustment or
franchise or otherwise (including, with respect to insurance maintained pursuant
to Subsections 7.06(a) or 7.06(b), insuring for a maximum amount that is less
than the amounts set forth in Sections 7.06(a) and 7.06(b)), the risks required
to be insured against pursuant to Sections 7.06(a) and 7.06(b), but in no case
shall the self-insurance with respect to all of the aircraft and engines in the
Company's fleet (including, without limitation, the Aircraft) exceed for any
12-month policy year 1% of the average aggregate insurable value (for the
preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which the Company carries insurance, unless an insurance broker of
national standing certifies that the standard among other major United States
airlines is a higher level of self-insurance, in which case the Company may
self-insure the Aircraft to such higher level. In addition to the foregoing
right to self-insure, the Company may self-insure to the extent of (1) any
deductible per occurrence that, in the case of the Aircraft, is not in excess of
the amount customarily allowed as a deductible in the industry or is required to
facilitate claims handling or (2) any applicable mandatory minimum per aircraft
(or if applicable per annum or other period) hull or liability insurance
deductibles imposed by the aircraft or hull liability insurers.
(d) Application of Insurance Payments. All losses will be
adjusted by the Company with the insurers. As between the Loan Trustee and the
Company it is agreed that all insurance payments received under policies
required to be maintained by the Company hereunder, exclusive of any payments
received in excess of the Loan Amount for the Aircraft from such policies, as
the result of the occurrence of an Event of Loss with respect to the Airframe or
an Engine will be applied as follows:
(i) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe that
has been or is being replaced by the Company pursuant to Section
7.05(a), such payments shall be paid over to, or retained by, the Loan
Trustee and upon completion of such replacement shall be paid over to,
or retained by, the Company;
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(ii) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe that
has not been and will not be replaced as contemplated by Section
7.05(a), so much of such payments remaining after reimbursement of the
Loan Trustee for its costs and expenses as do not exceed the amounts
required to be paid by the Company pursuant to Section 2.10 shall be
applied in reduction of the Company's obligation to pay such amounts,
if not already paid by the Company, or, if already paid by the Company,
shall be applied to reimburse the Company for its payment of such
amounts and the balance, if any, of such payment remaining thereafter
will be paid over to, or retained by, the Company; and
(iii) if such payments are received with respect to an
Engine, so much of such payments remaining after reimbursement of the
Loan Trustee for its costs and expenses shall be paid over to, or
retained by, the Company; provided that the Company shall have fully
performed its obligations under Section 7.05(b) with respect to the
Event of Loss for which such payments are made.
In all events, the insurance payment of any property damage
loss received under policies maintained by the Company in excess of the Loan
Amount for the Aircraft shall be paid to the Company.
The insurance payments for any loss or damage to the Airframe
or an Engine not constituting an Event of Loss with respect to the Airframe or
such Engine will be applied in payment (or to reimburse the Company) for repairs
or for replacement property in accordance with the terms of Sections 7.02 and
7.04, and any balance remaining after compliance with such Sections with respect
to such loss or damage shall be paid to the Company. Any amount referred to in
the preceding sentence or in clause (i), (ii) or (iii) of the first paragraph of
this Section 7.06(d) that is payable to the Company shall not be paid to the
Company (or, if it has been previously paid directly to the Company, shall not
be retained by the Company) if at the time of such payment an Event of Default
or Payment Default shall have occurred and be continuing, but shall be paid to
and held by the Loan Trustee as security for the obligations of the Company
under this Indenture, and at such time as there shall not be continuing any such
Event of Default or Payment Default, such amount shall, to the extent not
theretofore applied as provided herein, be paid to the Company.
(e) Reports, Etc. On or before the Closing Date and
annually upon renewal of the Company's insurance coverage, the Company will
furnish to the Loan Trustee and the Liquidity Provider a report signed by a firm
of independent aircraft insurance brokers appointed by the Company (which
brokers may be in the regular employ of the Company), stating the opinion of
such firm that the insurance then carried and maintained on the Aircraft
complies with the terms hereof; provided that all information contained in such
report shall be Confidential Information and shall be treated by the Loan
Trustee and the Liquidity Provider and each of their affiliates and officers,
directors, agents and employees in accordance with the provisions of Section
10.16. The Company will cause such firm to notify the Loan Trustee and the
Liquidity Provider of any act or omission on the part of the Company of which
such firm has knowledge that might invalidate or render unenforceable, in whole
or in part, any insurance on the Aircraft. The Company will also cause such firm
to notify the Loan Trustee and the Liquidity Provider as promptly as practicable
after such firm acquires knowledge that an interruption of any insurance
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carried and maintained on the Aircraft pursuant to this Section 7.06 will occur.
Such information may only be provided to other Persons in accordance with
Section 10.16.
(f) Salvage Rights; Other. All salvage rights to the
Airframe and each Engine shall remain with the Company's insurers at all times,
and any insurance policies of the Loan Trustee insuring the Airframe or any
Engine shall provide for a release to the Company of any and all salvage rights
in and to the Airframe or any Engine. Neither the Loan Trustee nor any
Noteholder may, directly or indirectly, obtain insurance for its own account
with respect to the Airframe or any Engine if such insurance would limit or
otherwise adversely affect the coverage or amounts payable under, or increase
the premiums for, any insurance required to be maintained pursuant to this
Section 7.06 or any other insurance maintained with respect to the Aircraft or
any other aircraft in the Company's fleet.
ARTICLE VIII
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01 Resignation or Removal; Appointment of Successor.
(a) The resignation or removal of the Loan Trustee and the appointment of a
successor Loan Trustee shall become effective only upon the successor Loan
Trustee's acceptance of appointment as provided in this Section 8.01. The Loan
Trustee or any successor thereto must resign if at any time it ceases to be
eligible in accordance with the provisions of Section 8.01(c) and may resign at
any time without cause by giving at least 60 days' prior written notice to the
Company and each Noteholder. In addition, either the Company (so long as no
Event of Default or Payment Default shall have occurred and be continuing) or a
Majority in Interest of Noteholders (but only with the consent of the Company so
long as no Event of Default or Payment Default shall have occurred and be
continuing), may at any time remove the Loan Trustee without cause by an
instrument in writing delivered to the Loan Trustee and each Noteholder, and, in
case of a removal by a Majority in Interest of Noteholders, to the Company. In
the case of the resignation or removal of the Loan Trustee, the Company shall
promptly appoint a successor Loan Trustee. If a successor Loan Trustee has not
been appointed within 60 days after such notice of resignation or removal, the
Loan Trustee, the Company or any Noteholder may apply to any court of competent
jurisdiction to appoint a successor Loan Trustee to act until such time, if any,
as a successor is appointed as above provided. The successor Loan Trustee so
appointed by such court shall immediately and without further act be superseded
by any successor Loan Trustee appointed as above provided.
(b) Any successor Loan Trustee, however appointed, shall
execute and deliver to the predecessor Loan Trustee and the Company an
instrument accepting such appointment and assuming the obligations of the Loan
Trustee arising from and after the time of such appointment, and thereupon such
successor Loan Trustee, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor Loan Trustee
in the trust hereunder applicable to it with like effect as if originally named
the Loan Trustee herein; but nevertheless upon the written request of such
successor Loan Trustee, such predecessor Loan Trustee shall execute and deliver
an instrument transferring to such successor Loan Trustee all the estates,
properties, rights and powers of such predecessor Loan Trustee, and such
predecessor Loan Trustee shall duly assign, transfer, deliver and pay over to
such successor
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Loan Trustee all monies or other property and all other books and records, or
true, correct and complete copies thereof, then held by such predecessor Loan
Trustee.
(c) This Indenture shall at all times have a Loan
Trustee, however appointed, that is a Citizen of the United States (without the
use of a voting trust) and a bank or trust company having a combined capital and
surplus of at least $100,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence or hereafter
incurred, are fully and unconditionally guaranteed by a corporation organized
and doing business under the laws of the United States or any state or territory
thereof or the District of Columbia and having a combined capital and surplus of
at least $100,000,000) or a corporation with a net worth of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Loan Trustee upon reasonable or customary
terms. If such bank, trust company or corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 8.01(c) the combined capital and surplus
of such bank, trust company or corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of conditions so
published. In case at any time the Loan Trustee ceases to be eligible in
accordance with the provisions of this Section 8.01(c), the Loan Trustee shall
resign immediately in the manner and with the effect specified in Section
8.01(a).
(d) Any corporation into which the Loan Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Loan Trustee
is a party, or any corporation to which substantially all the corporate trust
business of the Loan Trustee may be transferred, shall, subject to the terms of
Section 8.01(c), be a successor Loan Trustee under this Indenture without
further act.
Section 8.02 Appointment of Additional and Separate Trustees.
(a) Whenever (i) the Loan Trustee deems it necessary or desirable in order to
conform to any law of any jurisdiction in which all or any part of the
Collateral is situated or to make any claim or bring any suit with respect to or
in connection with the Collateral, any Operative Document or any of the
transactions contemplated by the Operative Documents, (ii) the Loan Trustee
shall be advised by counsel satisfactory to it that it is necessary or prudent
in the interests of the Noteholders (and the Loan Trustee shall so advise the
Company) or (iii) the Loan Trustee has been requested to do so by a Majority in
Interest of Noteholders, then in any such case, the Loan Trustee and, upon the
written request of the Loan Trustee, the Company, shall execute and deliver an
indenture supplemental hereto and such other instruments as from time to time
are necessary or advisable either (1) to constitute one or more banks or trust
companies or corporations meeting the requirements of Section 8.01(c) and
approved by the Loan Trustee, either to act jointly with the Loan Trustee as
additional trustee or trustees of all or any part of the Collateral or to act as
separate trustee or trustees of all or any part of the Collateral, in each case
with such rights, powers, duties and obligations consistent with this Indenture
as is provided in such supplemental indenture or other instruments as the Loan
Trustee or a Majority in Interest of Noteholders deems necessary or advisable,
or (2) to clarify, add to or subtract from the rights, powers, duties and
obligations theretofore granted any such additional or separate trustee, subject
in each case to the remaining provisions of this Section 8.02. If no Event of
Default has occurred and is continuing, no additional or supplemental trustee
shall be appointed without the Company's
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consent. If an Event of Default shall have occurred and be continuing, the Loan
Trustee may act under the foregoing provisions of this Section 8.02(a) without
the concurrence of the Company, and the Company hereby irrevocably appoints
(which appointment is coupled with an interest) the Loan Trustee as its agent
and attorney-in-fact to act for it under the foregoing provisions of this
Section 8.02(a). The Loan Trustee may, in such capacity, execute, deliver and
perform any such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate trustee or for
the clarification of, addition to or subtraction from the rights, powers, duties
or obligations theretofore granted to any such additional or separate trustee,
subject in each case to the remaining provisions of this Section 8.02. In case
any additional or separate trustee appointed under this Section 8.02(a) becomes
incapable of acting, resigns or is removed, all the assets, property, rights,
powers, trusts, duties and obligations of such additional or separate trustee
shall revert to the Loan Trustee until a successor additional or separate
trustee is appointed as provided in this Section 8.02(a).
(b) No additional or separate trustee shall be entitled
to exercise any of the rights, powers, duties and obligations conferred upon the
Loan Trustee in respect of the custody, investment and payment of monies and all
monies received by any such additional or separate trustee from or constituting
part of the Collateral or otherwise payable under any Operative Documents to the
Loan Trustee shall be promptly paid over by it to the Loan Trustee. All other
rights, powers, duties and obligations conferred or imposed upon any additional
or separate trustee shall be exercised or performed by the Loan Trustee and such
additional or separate trustee jointly except to the extent that applicable law
of any jurisdiction in which any particular act is to be performed renders the
Loan Trustee incompetent or unqualified to perform such act, in which event such
rights, powers, duties and obligations (including the holding of title to all or
part of the Collateral in any such jurisdiction) shall be exercised and
performed by such additional or separate trustee. No additional or separate
trustee shall take any discretionary action except on the instructions of the
Loan Trustee or a Majority in Interest of Noteholders. No trustee hereunder
shall be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Loan Trustee shall be liable for the consequences of
its lack of reasonable care in selecting, and the Loan Trustee's own actions in
acting with, any additional or separate trustee. Each additional or separate
trustee appointed pursuant to this Section 8.02 shall be subject to, and shall
have the benefit of Articles IV, V, VI, VIII, IX and X hereof insofar as they
apply to the Loan Trustee. The powers of any additional or separate trustee
appointed pursuant to this Section 8.02 shall not in any case exceed those of
the Loan Trustee.
(c) If at any time the Loan Trustee deems it no longer
necessary or desirable or in the event that the Loan Trustee has been requested
to do so in writing by a Majority in Interest of Noteholders, the Loan Trustee
and, upon the written request of the Loan Trustee, the Company, shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional or separate trustee. The
Loan Trustee may act on behalf of the Company under this Section 8.02(c) when
and to the extent it could so act under Section 8.02(a) hereof. In any case, the
Company may remove an additional or separate trustee in the manner set forth in
Section 8.01.
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ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01 Amendments to this Indenture without Consent of
Holders. At any time after the date hereof, the Company and the Loan Trustee may
enter into one or more agreements supplemental hereto without notice to or
consent of any Noteholder for any of the following purposes: (i) to evidence the
succession of another Person to the Company and the assumption by any such
successor of the covenants of the Company contained in any Operative Documents
pursuant to Section 6.02(e) of the Participation Agreement; (ii) to cure any
defect or inconsistency herein or in the Equipment Notes; (iii) to cure any
ambiguity or correct any mistake; (iv) to evidence the succession of a new
trustee hereunder pursuant hereto or the removal of the trustee hereunder or to
provide for or facilitate the appointment of an additional or separate trustee
pursuant to Section 8.02 hereof; (v) to convey, transfer, assign, mortgage or
pledge any property to or with the Loan Trustee; (vi) to make any other
provisions or amendments with respect to matters or questions arising hereunder
or under the Equipment Notes, or to amend, modify or supplement any provision
hereof or thereof, so long as such action shall not adversely affect the
interests of the Noteholders or the Liquidity Provider; (vii) to correct or
amplify the description of any property at any time subject to the Lien of this
Indenture, or better to assure, convey and confirm unto the Loan Trustee any
property subject or required to be subject to the Lien of this Indenture or to
subject to the Lien of this Indenture the Airframe or Engines or any Replacement
Airframe or Replacement Engine; (viii) to add to the covenants of the Company
for the benefit of the Noteholders, or to surrender any rights or power herein
conferred upon the Company; (ix) to add to the rights of the Noteholders; (x) to
include on the Equipment Notes any legend required by law or as otherwise
necessary or advisable; (xi) to comply with any applicable requirements of the
Trust Indenture Act of 1939, as amended, or any other requirements of applicable
law or of any regulatory body and (xii) to provide for the issuance of Series D
Equipment Notes and/or Pass Through Certificates issued by the Class D Pass
Through Trust and to make changes relating thereto, provided that (A) the
Company shall have obtained written confirmation from each Rating Agency that
the issuance of the Series D Equipment Notes would not result in a reduction of
the rating for any class of Pass Through Certificates below the then current
rating for such class of Pass Through Certificates or a withdrawal or suspension
of the rating of any class of Pass Through Certificates and (B) (1) if the
Series D Equipment Notes are issued to a Class D Pass Through Trust, the Pass
Through Trustee thereof shall become a party to the Intercreditor Agreement or
(2) if Series D Equipment Notes are issued to any person other than a Class D
Pass Through Trust, the Series D Equipment Notes will be subject to the
provisions of the Intercreditor Agreement that allow the "Controlling Party" (as
defined in the Intercreditor Agreement), during the continuance of an "Indenture
Event of Default" (as defined in the Intercreditor Agreement) to direct the Loan
Trustee in taking action under this Indenture.
Section 9.02 Amendments to this Indenture with Consent of
Holders. (a) With the written consent of a Majority in Interest of Noteholders,
the Company may, and the Loan Trustee shall, subject to Section 9.06, at any
time and from time to time, enter into such supplemental agreements to add any
provisions to or to change or eliminate any provisions of this Indenture or of
any such supplemental agreements or to modify in any manner the rights and
obligations of the Company, the Loan Trustee and of the Noteholders under this
Indenture;
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provided, however, that without the consent of each Noteholder affected thereby,
an amendment under this Section 9.02 may not:
(1) reduce the principal amount of, Make-Whole Amount, if
any, or interest on, any Equipment Note;
(2) change the date on which any principal amount of,
Make-Whole Amount, if any, or interest on any Equipment Note, is due or
payable;
(3) create any Lien with respect to the Collateral prior
to or pari passu with the Lien thereon under this Indenture except such
as are permitted by this Indenture, or deprive any Noteholder of the
benefit of the Lien on the Collateral created by this Indenture;
(4) reduce the percentage of the outstanding principal
amount of the Equipment Notes the consent of whose holders is required
for any such supplemental agreement, or the consent of whose holders is
required for any waiver of compliance with certain provisions of this
Indenture or of certain defaults hereunder or their consequences
provided for in this Indenture; or
(5) make any change in Section 4.05 or this Section 9.02,
except to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of each Noteholder
affected thereby.
(b) It is not necessary under this Section 9.02 for the
Noteholders to consent to the particular form of any proposed supplemental
agreement, but it is sufficient if they consent to the substance thereof.
(c) Promptly after the execution by the Company and the
Loan Trustee of any supplemental agreement pursuant to the provisions of this
Section 9.02, the Loan Trustee shall transmit by first-class mail a notice,
setting forth in general terms the substance of such supplemental agreement, to
all Noteholders, as the names and addresses of such Noteholders appear on the
Equipment Note Register. Any failure of the Loan Trustee to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the validity
of any such supplemental agreement.
Section 9.03 Amendments, Waivers, Etc. of the Participation
Agreement. Without the consent of a Majority in Interest of Noteholders, the
respective parties to the Participation Agreement may not modify, amend or
supplement such agreement, or give any consent, waiver, authorization or
approval thereunder, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder; provided, however, that,
without the consent of the Loan Trustee or any Noteholder, the Participation
Agreement may be modified, amended or supplemented in order (i) to cure any
defect or inconsistency therein or to cure any ambiguity or correct any mistake,
(ii) to amend, modify or supplement any provision thereof or make any other
provision with respect to matters or questions arising thereunder or under this
Indenture, provided that the making of any such other provision shall not
materially adversely affect the interests of the Noteholders or (iii) to make
any other change, or reflect any other
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matter, of the kind referred to in clauses (i) through (xi) of Section
9.01. Notwithstanding the foregoing, without the consent of the Liquidity
Provider, the Company shall not enter into any amendment, waiver or modification
of or supplement or consent to the Participation Agreement which shall reduce,
modify or amend any indemnities in favor of the Liquidity Provider contained
therein.
Section 9.04 Revocation and Effect of Consents. Until an
amendment or waiver becomes effective, a consent to it by a Noteholder is a
continuing consent by the Noteholder and every subsequent Noteholder, even if
notation of the consent is not made on any Equipment Note.
Section 9.05 Notation on or Exchange of Equipment Notes. The
Loan Trustee may place an appropriate notation about an amendment or waiver on
any Equipment Note thereafter executed. The Loan Trustee in exchange for such
Equipment Notes may execute new Equipment Notes that reflect the amendment or
waiver.
Section 9.06 Trustee Protected. If, in the reasonable opinion
of the institution acting as Loan Trustee, any document required to be executed
by it pursuant to the terms of Section 9.01 or 9.02 adversely affects any right,
duty, immunity or indemnity with respect to such institution under this
Indenture, such institution may in its discretion decline to execute such
document.
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination of Indenture. (a) Upon (or at any
time after):
(i) payment in full of the principal amount, Make-Whole
Amount, if any, and interest on and all other amounts due under all
Equipment Notes and provided that there shall then be no other Secured
Obligations due to the Noteholders, the Indenture Indemnitees and the
Loan Trustee hereunder or under the Participation Agreement; or
(ii) the 91st day after there has been irrevocably
deposited (except as provided in Section 2.15 or 10.01(d)) with the
Loan Trustee as funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the Noteholders: (A) money in
an amount, (B) U.S. Government Obligations that, through the payment of
interest and principal in respect thereof in accordance with their
terms, will provide (not later than one Business Day before the due
date of any payment referred to below in this paragraph) money in an
amount, or (C) a combination of money and U.S. Government Obligations
referred to in the foregoing clause (B), sufficient, in the opinion of
a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered to
the Loan Trustee, to pay in full the outstanding principal amount of
and interest on all the Equipment Notes on the dates such amounts are
due; provided, however, that
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(1) the Company has delivered to the Loan Trustee an
officer's certificate and an opinion of counsel to the effect that
there has been a change in tax law since November 7, 2000 or has been
published by the Internal Revenue Service a ruling to the effect that
Noteholders and the holders of the Pass Through Certificates will not
recognize income, gain or loss for United States Federal income tax
purposes as a result of the exercise by the Company of its option under
this subsection (ii) and will be subject to United States Federal
income tax on the same amounts and in the same manner and at the same
times, as would have been the case if such option had not been
exercised;
(2) all other amounts then due and payable hereunder have
been paid;
(3) the Company has delivered to the Loan Trustee an
officer's certificate and an opinion of counsel (which may be internal
counsel to the Company), each stating that all conditions precedent to
the satisfaction and discharge of this Indenture set forth in this
Section 10.01 have been complied with;
(4) such deposit will not result in a breach or violation
of, or constitute an Event of Default under, this Indenture;
(5) no Event of Default set forth in Sections 4.01(f),
(g), (h) or (i) shall have occurred and be continuing on the date of
such deposit or at any time during the period beginning on such date
and ending on the 91st day after the date of such deposit; and
(6) the Company has delivered to the Loan Trustee written
confirmation from each of the Rating Agencies that such deposit, the
resulting release and discharge of the Company from its obligations
under this Indenture and under the Equipment Notes and the release of
the Aircraft and the balance of the Collateral from the Lien of this
Indenture will not result in a reduction in the rating for any class of
Pass Through Certificates below the then current rating for such class
of Pass Through Certificates or a withdrawal or suspension of the
rating of any class of Pass Through Certificates;
the Company and the Loan Trustee shall be deemed to have been released and
discharged from their respective obligations hereunder and under the Equipment
Notes and the security interest, mortgage lien and all other estate, right,
title and interest granted by this Indenture shall cease and become null and
void and all of the property, rights, interests and privileges granted as
security for the Equipment Notes shall revert to and revest in the Company
without any other act or formality whatsoever, and the Loan Trustee shall, upon
the written request of the Company, execute and deliver to, or as directed in
writing by, the Company an appropriate instrument (in due form for recording)
releasing the Aircraft and the balance of the Collateral from the Lien of this
Indenture together with such other instruments and documents as the Company
reasonably requests to give effect to the release and termination, and, in such
event, this Indenture and the trusts created hereby shall terminate and this
Indenture shall be of no further force or effect; provided, however, that this
Indenture and the trusts created hereby shall earlier terminate and this
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Loan Trustee of all property constituting part of the
Collateral and the final distribution by the Loan Trustee of all monies or other
property or proceeds constituting part of the Collateral in accordance with the
terms hereof. Except as otherwise provided above, this Indenture and the
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trusts created hereby shall continue in full force and effect in accordance with
the terms hereof. Upon the deposit of the defeasance funds as described above,
the right of the Company to cause redemption of the Equipment Notes shall cease.
(b) Notwithstanding the provisions of Section
10.01(a)(ii), the obligations of the Loan Trustee contained in Sections 2.01,
2.02, 2.03, 2.04, 2.05, 2.07, 2.08, 2.09, 2.13, 2.15, 2.16, 3.01, 10.01(c) and
10.01(d) of this Section 10.01, and the other rights, duties, immunities and
privileges hereunder of the Loan Trustee, shall survive.
(c) All monies and U.S. Government Obligations deposited
with the Loan Trustee pursuant to Section 10.01(a)(ii) shall be held in trust
and applied by it, in accordance with the provisions of the Equipment Notes and
this Indenture, to the payment to the Noteholders of all sums due and to become
due thereon for principal and interest, but such money need not be segregated
from other funds received pursuant hereto except to the extent required by law.
(d) The Loan Trustee shall promptly pay or return to the
Company upon request of the Company any money or U.S. Government Obligations
held by it at any time that are not required for the payment of the amounts
described above in Section 10.01(c) on the Equipment Notes for which money or
U.S. Government Obligations have been deposited pursuant to Section
10.01(a)(ii).
Section 10.02 No Legal Title to Collateral in Noteholders. No
Noteholder shall have legal title to any part of the Collateral. No transfer, by
operation of law or otherwise, of any Equipment Note or other right, title and
interest of any Noteholder in and to the Collateral or hereunder shall operate
to terminate this Indenture or entitle such Noteholder or any successor or
transferee of such holder to an accounting or to the transfer to it of any legal
title to any part of the Collateral.
Section 10.03 Sale of Aircraft by Loan Trustee is Binding. Any
sale or other conveyance of the Aircraft, the Airframe, any Engine or any
interest therein by the Loan Trustee made pursuant to the terms of this
Indenture shall bind the Noteholders and the Company and shall be effective to
transfer or convey all right, title and interest of the Loan Trustee, the
Company and such Noteholders in and to such Aircraft, Airframe, Engine or
interest therein. No purchaser or other grantee shall be required to inquire as
to the authorization, necessity, expediency or regularity of such sale or
conveyance or as to the application of any sale or other proceeds with respect
thereto by the Noteholders.
Section 10.04 Indenture for Benefit of the Company, Loan
Trustee and Noteholders. Nothing in this Indenture, whether express or implied,
shall be construed to give any Person other than the Company, the Loan Trustee,
the Noteholders or the other Indenture Indemnitees any legal or equitable right,
remedy or claim under or in respect of this Indenture.
Section 10.05 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents required or permitted under the terms
and provisions of this Indenture shall be in English and in writing, and given
by United States registered or certified mail, courier service or facsimile, and
any such notice shall be effective when delivered (or, if delivered by
facsimile,
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upon completion of transmission and confirmation by the sender (by a telephone
call to a representative of the recipient or by machine confirmation) that such
transmission was received) addressed as follows:
(i) if to the Company, addressed to:
Delta Air Lines, Inc.
1030 Delta Boulevard
Atlanta, Georgia 30320
Attention: Director - Corporate Finance, Dept. 856
Telephone: (404) 715-6707
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 the Loan 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 Noteholder, addressed to such Noteholder at its address set forth
in the Equipment Note Register maintained pursuant to Section 2.07 hereof.
Any party, by notice to the other parties hereto, may
designate additional or different addresses for subsequent notices or
communications. Whenever the words "notice" or "notify" or similar words are
used herein, they mean the provision of formal notice as set forth in this
Section 10.05.
Section 10.06 Severability. Any provision of this Indenture
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 10.07 No Oral Modification or Continuing Waivers. No
terms or provisions of this Indenture or of the Equipment Notes may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the Company and the Loan
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Trustee, in compliance with Article IX. Any waiver of the terms hereof or of any
Equipment Note shall be effective only in the specific instance and for the
specific purpose given.
Section 10.08 Successors and Assigns. All covenants and
agreements contained herein shall bind and inure to the benefit of, and be
enforceable by, each of the parties hereto and the successors and permitted
assigns of each, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by any Noteholder shall bind the
successors and permitted assigns of such Noteholder. Each Noteholder by its
acceptance of an Equipment Note agrees to be bound by this Indenture and all
provisions of the Participation Agreement applicable to a Noteholder.
Section 10.09 Headings. The headings of the various Articles
and Sections herein and in the Table of Contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
Section 10.10 Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, the Loan Trustee, any
Noteholder or any other party to any of the Operative Documents or the Pass
Through Documents or any of their affiliates may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
the Company, fully to the same extent as if this Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to the Company for any purpose whatsoever, whether related to any of the
transactions contemplated hereby or otherwise.
Section 10.11 Voting by Noteholders. All votes of the
Noteholders shall be governed by a vote of a Majority in Interest of
Noteholders, except as otherwise provided herein.
Section 10.12 Section 1110. It is the intention of the parties
hereto that the security interest created hereby, to the fullest extent
available under applicable law, entitles the Loan Trustee, on behalf of the
Noteholders, to all of the benefits of Section 1110 with respect to the
Aircraft.
Section 10.13 The Company's Performance and Rights. Any
obligation imposed on the Company herein shall require only that the Company
perform or cause to be performed such obligation, even if stated as a direct
obligation, and the performance of any such obligation by any permitted
assignee, lessee or transferee under an assignment, lease or transfer agreement
then in effect and in accordance with the provisions of the Operative Documents
shall constitute performance by the Company and, to the extent of such
performance, discharge such obligation by the Company. Except as otherwise
expressly provided herein, any right granted to the Company in this Indenture
shall grant the Company the right to permit such right to be exercised by any
such assignee, lessee or transferee. The inclusion of specific references to
obligations or rights of any such assignee, lessee or transferee in certain
provisions of this Indenture shall not in any way prevent or diminish the
application of the provisions of the two sentences immediately preceding with
respect to obligations or rights in respect of which specific reference to any
such assignee, lessee or transferee has not been made in this Indenture.
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Section 10.14 Counterparts. This Indenture may be executed in
any number of counterparts (and each of the parties hereto shall not be required
to execute the same counterpart). Each counterpart of this Indenture including a
signature page or pages executed by each of the parties hereto shall be an
original counterpart of this Indenture, but all of such counterparts together
shall constitute one instrument.
SECTION 10.15 GOVERNING LAW. THIS INDENTURE HAS BEEN DELIVERED
IN THE STATE OF NEW YORK AND THIS INDENTURE, ANY INDENTURE SUPPLEMENT AND THE
EQUIPMENT NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.16 Confidential Information. The term "Confidential
Information" means: (a) the existence and terms of any lease of the Airframe or
Engines pursuant to Section 7.02(a) and the identity of the Permitted Lessee
thereunder; (b) all information obtained in connection with any inspection
conducted by the Loan Trustee or its representative pursuant to Section 7.03(a);
(c) each certification furnished to the Loan Trustee pursuant to Sections
7.06(a) and 7.06(b); (d) all information contained in each report furnished to
the Loan Trustee pursuant to Section 7.06(e); and (e) all information regarding
the Warranty Rights. All Confidential Information shall be held confidential by
the Loan Trustee and each Noteholder and each affiliate, agent, officer,
director, or employee of any thereof and shall not be furnished or disclosed by
any of them to anyone other than (i) the Loan Trustee or any Noteholder and (ii)
their respective bank examiners, auditors, accountants, agents and legal
counsel, and except as may be required by an order of any court or
administrative agency or by any statute, rule, regulation or order of any
governmental authority.
Section 10.17 Submission to Jurisdiction. Each of the parties
hereto, and by acceptance of Equipment Notes, each Noteholder, to the extent it
may do so under applicable law, for purposes hereof and of all other Operative
Agreements hereby (a) irrevocably submits itself to the non-exclusive
jurisdiction of the courts of the State of New York sitting in the City of New
York and to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Indenture, the subject matter hereof or any
of the transactions contemplated hereby brought by any party or parties hereto
or thereto, or their successors or permitted assigns and (b) waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that this Indenture or the Equipment Notes or the subject matter hereof or
any of the transactions contemplated hereby may not be enforced in or by such
courts.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective officers thereof duly
authorized, as of the date first above written.
DELTA AIR LINES, INC.
By:
----------------------------------------
Name: Joan Repetti
Title: Director - Corporate Finance
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:
67
EXHIBIT A
to INDENTURE AND
SECURITY AGREEMENT
INDENTURE SUPPLEMENT NO. ___
INDENTURE SUPPLEMENT NO. __ , dated _____________, ____
("Indenture Supplement"), between DELTA AIR LINES, INC. (the "Company") and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in
its individual capacity but solely as Loan Trustee under the Indenture (each as
hereinafter defined).
WITNESSETH:
WHEREAS, the Indenture and Security Agreement (N376DA), dated
as of November 16, 2000 (the "Indenture"; capitalized terms used herein without
definition shall have the meanings specified therefor in Annex A to the
Indenture), between the Company and State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity, except as
expressly provided therein, but solely as Loan Trustee (the "Loan Trustee"),
provides for the execution and delivery of supplements thereto substantially in
the form hereof which shall particularly describe the Aircraft, and shall
specifically grant a security interest in the Aircraft to the Loan Trustee; and
[WHEREAS, the Indenture relates to the Airframe and Engines
described in Annex A attached hereto and made a part hereof, and a counterpart
of the Indenture is attached to and made a part of this Indenture Supplement;]*
[WHEREAS, the Company has, as provided in the Indenture,
heretofore executed and delivered to the Loan Trustee Indenture Supplement(s)
for the purpose of specifically subjecting to the Lien of the Indenture certain
airframes and/or engines therein described, which Indenture Supplement(s) is/are
dated and has/have been duly recorded with the FAA as set forth below, to wit:
Date Recordation Date FAA Document Number]**
- ---- ---------------- --------------------
NOW, THEREFORE, to secure the prompt and complete payment
(whether at stated maturity, by acceleration or otherwise) of principal of,
Make-Whole Amount, if any, and interest on, the Equipment Notes and all other
amounts payable by the Company under the Operative Documents and the performance
and observance by the Company of all the
- -------------------------
* Use for Indenture Supplement No. 1 only.
** Use for all Indenture Supplements other than Indenture Supplement No. 1.
68
agreements and covenants to be performed or observed by the Company for the
benefit of the Noteholders and the Indenture Indemnitees contained in the
Operative Documents, and in consideration of the premises and of the covenants
contained in the Operative Documents, and for other good and valuable
consideration given by the Loan Trustee, the Noteholders and the Indenture
Indemnitees to the Company at or before the Closing Date, the receipt of which
is hereby acknowledged, the Company does hereby grant, bargain, sell, convey,
transfer, mortgage, assign, pledge and confirm unto the Loan Trustee and its
successors in trust and permitted assigns, for the security and benefit of the
Loan Trustee, the Noteholders and the Indenture Indemnitees, a first priority
security interest in, and mortgage lien on, all estate, right, title and
interest of the Company in, to and under the Aircraft, including the Airframe
and Engines described in Annex A attached hereto, whether or not any such Engine
from time to time is installed on the Airframe or any other airframe or any
other aircraft, and any and all Parts relating thereto, and, to the extent
provided in the Indenture, all substitutions and replacements of, and additions,
improvements, accessions and accumulations to, the Aircraft, including the
Airframe, the Engines and any and all Parts (in each case other than any
substitutions, replacements, additions, improvements, accessions and
accumulations that constitute items excluded from the definition of Parts by
clauses (b), (c), (d), (e) and (f) thereof) relating thereto;
To have and to hold all and singular the aforesaid property
unto the Loan Trustee, and its successors and assigns, in trust for the ratable
benefit and security of the Noteholders and the Indenture Indemnitees, except as
otherwise provided in the Indenture, including Section 2.13 and Article III of
the Indenture, without any preference, distinction or priority of any one
Equipment Note over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and subject to the terms and provisions set forth
in the Indenture.
This Indenture Supplement shall be construed as supplemental
to the Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
THIS INDENTURE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF
NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
69
IN WITNESS WHEREOF, the undersigned have caused this Indenture
Supplement No. __ to be duly executed by their respective duly authorized
officers, on the date first above written.
DELTA AIR LINES, INC.
By:
-----------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, as
Loan Trustee
By:
-----------------------------------
Name:
Title:
70
Annex A to
Indenture Supplement No.
--
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
Manufacturer Model FAA Registration No. Manufacturer's Serial No.
- ------------ ----- -------------------- -------------------------
ENGINES
Manufacturer Model Manufacturer's Serial No.
- ------------ ----- -------------------------
Each Engine is of 750 or more "rated take-off horsepower" or
the equivalent of such horsepower.
Annex A-1
71
EXHIBIT B
to INDENTURE AND
SECURITY AGREEMENT
LIST OF PERMITTED COUNTRIES
Argentina Grenada Norway
Australia Guatemala Paraguay
Austria Hungary Peoples' Republic of China
Bahamas Iceland Philippines
Barbados India Poland
Belgium Indonesia Portugal
Bermuda Islands Ireland Republic of China (Taiwan)
Brazil Italy Singapore
British Virgin Islands Jamaica South Africa
Canada Japan 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 Antille Venezuela
Germany Netherlands, the
Greece New Zealand
B-1
72
EXHIBIT C
to INDENTURE AND
SECURITY AGREEMENT
AIRCRAFT TYPE VALUE FOR SECTION 7.06(b)
C-1
73
SCHEDULE I
to INDENTURE AND
SECURITY AGREEMENT
DESCRIPTION OF EQUIPMENT NOTES
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.
Original Principal Amount Interest Rate Maturity Date
------------------------- ------------- -------------
Series A-1
Equipment Notes: $ 5,787,759.42 7.379% November 18, 2009
Series A-2
Equipment Notes: $12,786,640.58 7.570% November 18, 2010
Series B
Equipment Notes: $ 3,161,376.92 7.920% November 18, 2010
Series C
Equipment Notes: $ 4,156,170.27 7.779% November 18, 2005
Schedule I-1
74
EQUIPMENT NOTES AMORTIZATION
SERIES A-1 EQUIPMENT NOTES
Percentage of
Original Principal Amount
Payment Date to be Paid
The portion of this Schedule appearing below this text is intentionally deleted
from the FAA filing counterpart because the parties hereto deem it to contain
confidential information.
Schedule I-2
75
SCHEDULE II
to INDENTURE AND
SECURITY AGREEMENT
PASS THROUGH TRUST AGREEMENT AND
PASS THROUGH TRUST SUPPLEMENTS
Pass Through Trust Agreement, dated as of November 16, 2000, between Delta Air
Lines, Inc. and State Street Bank and Trust Company of Connecticut, National
Association, as trustee, as supplemented by Trust Supplement No. 2000-1A-1,
dated as of November 16, 2000, Trust Supplement No. 2000-1A-2, dated as of
November 16, 2000, Trust Supplement No. 2000-1B, dated as of November 16, 2000,
and Trust Supplement No. 2000-1C, dated as of November 16, 2000.
Schedule I-3