EXHIBIT 4.12
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INDENTURE AND SECURITY AGREEMENT
(N195DN)
Dated as of January 30, 2003
between
DELTA AIR LINES, INC.,
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Loan Trustee
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One Boeing 767-332ER Aircraft
U.S. Registration No. N195DN
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions................................................................................... 4
Section 1.02 Other Definitional Provisions................................................................. 4
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01 Form of Equipment Notes....................................................................... 5
Section 2.02 Issuance and Terms of Equipment Notes......................................................... 9
Section 2.03 Method of Payment............................................................................ 10
Section 2.04 Withholding Taxes............................................................................ 11
Section 2.05 Application of Payments...................................................................... 11
Section 2.06 Termination of Interest in Collateral........................................................ 11
Section 2.07 Registration, Transfer and Exchange of Equipment Notes....................................... 12
Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment Notes......................................... 13
Section 2.09 Payment of Expenses on Transfer; Cancellation................................................ 13
Section 2.10 Mandatory Redemption of Equipment Notes...................................................... 13
Section 2.11 Voluntary Redemption of Equipment Notes...................................................... 14
Section 2.12 Redemptions; Notice of Redemptions; Repurchases.............................................. 14
Section 2.13 Subordination................................................................................ 15
Section 2.14 Certain Payments............................................................................. 15
Section 2.15 Repayment of Monies for Equipment Note Payments Held by Loan Trustee......................... 16
Section 2.16 Directions by Subordination Agent............................................................ 17
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE COLLATERAL
Section 3.01 Basic Distributions.......................................................................... 17
Section 3.02 Event of Loss; Optional Redemption........................................................... 18
Section 3.03 Payments after Event of Default.............................................................. 19
Section 3.04 Certain Payments............................................................................. 22
Section 3.05 Payments to Company.......................................................................... 22
Section 3.06 Cooperation. ................................................................................ 22
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ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
Section 4.01 Events of Default............................................................................ 23
Section 4.02 Remedies..................................................................................... 24
Section 4.03 Remedies Cumulative.......................................................................... 27
Section 4.04 Discontinuance of Proceedings................................................................ 28
Section 4.05 Waiver of Past Defaults...................................................................... 28
Section 4.06 Noteholders May Not Bring Suit Except Under Certain Conditions............................... 28
Section 4.07 Appointment of a Receiver.................................................................... 29
Section 4.08 Rights of Noteholders to Receive Payment..................................................... 29
ARTICLE V
DUTIES OF LOAN TRUSTEE
Section 5.01 Notice of Event of Default................................................................... 29
Section 5.02 Action upon Instructions; Certain Rights and Limitations..................................... 30
Section 5.03 Indemnification.............................................................................. 30
Section 5.04 No Duties Except as Specified in Indenture or Instructions................................... 30
Section 5.05 No Action Except under Indenture or Instructions............................................. 30
Section 5.06 Investment of Amounts Held by Loan Trustee................................................... 30
ARTICLE VI
LOAN TRUSTEE
Section 6.01 Acceptance of Trusts and Duties.............................................................. 31
Section 6.02 Absence of Certain Duties.................................................................... 32
Section 6.03 No Representations or Warranties as to the Documents......................................... 32
Section 6.04 No Segregation of Monies; No Interest........................................................ 32
Section 6.05 Reliance; Agents; Advice of Counsel.......................................................... 32
Section 6.06 Instructions from Noteholders................................................................ 33
ARTICLE VII
OPERATING COVENANTS OF COMPANY
Section 7.01 Liens........................................................................................ 33
Section 7.02 Possession, Operation and Use, Maintenance and Registration.................................. 34
Section 7.03 Inspection; Financial Information............................................................ 40
Section 7.04 Replacement and Pooling of Parts; Alterations, Modifications and
Additions; Substitution of Engines ........................................................ 41
Section 7.05 Loss, Destruction or Requisition............................................................. 43
Section 7.06 Insurance.................................................................................... 47
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ARTICLE VIII
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01 Resignation or Removal; Appointment of Successor............................................. 52
Section 8.02 Appointment of Additional and Separate Trustees.............................................. 53
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01 Amendments to this Indenture without Consent of Holders...................................... 55
Section 9.02 Amendments to this Indenture with Consent of Holders......................................... 55
Section 9.03 Amendments, Waivers, Etc. of the Participation Agreement..................................... 56
Section 9.04 Revocation and Effect of Consents............................................................ 57
Section 9.05 Notation on or Exchange of Equipment Notes................................................... 57
Section 9.06 Trustee Protected............................................................................ 57
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination of Indenture..................................................................... 57
Section 10.02 No Legal Title to Collateral in Noteholders.................................................. 58
Section 10.03 Sale of Aircraft by Loan Trustee is Binding.................................................. 58
Section 10.04 Indenture for Benefit of Company, Loan Trustee and Noteholders............................... 58
Section 10.05 Notices...................................................................................... 58
Section 10.06 Severability................................................................................. 59
Section 10.07 No Oral Modification or Continuing Waivers................................................... 59
Section 10.08 Successors and Assigns....................................................................... 60
Section 10.09 Headings..................................................................................... 60
Section 10.10 Normal Commercial Relations.................................................................. 60
Section 10.11 Voting by Noteholders........................................................................ 60
Section 10.12 Section 1110................................................................................. 60
Section 10.13 Company's Performance and Rights............................................................. 60
Section 10.14 Counterparts................................................................................. 60
Section 10.15 Governing Law................................................................................ 61
Section 10.16 Confidential Information..................................................................... 61
Section 10.17 Submission to Jurisdiction................................................................... 61
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Exhibit A - Form of Indenture Supplement
Exhibit B - List of Permitted Countries
Exhibit C - Aircraft Type Equipment Value for Section 7.06(b)
Schedule I - Description of Equipment Notes
Schedule II - Pass Through Trust Agreement and Pass Through Trust
Supplements
Annex A - Definitions
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INDENTURE AND SECURITY AGREEMENT
(N195DN)
This INDENTURE AND SECURITY AGREEMENT (N195DN), dated as of
January 30, 2003, is made by and between DELTA AIR LINES, INC., a Delaware
corporation (together with its successors and permitted assigns, "Company"), and
U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly stated herein, but solely as Loan
Trustee hereunder (together with its permitted successors hereunder, "Loan
Trustee").
W I T N E S S E T H:
WHEREAS, the parties desire by this Indenture (such term and
other capitalized terms used herein without definition being defined as provided
in Article I), among other things, to provide for (i) the issuance by Company of
the Equipment Notes and (ii) the assignment, mortgage and pledge by Company to
Loan Trustee, as part of the Collateral hereunder, among other things, of all of
Company's estate, right, title and interest in and to the Aircraft, as security
for, among other things, Company's obligations to Loan Trustee, for the ratable
benefit and security of Noteholders, subject to Section 2.13 and Article III;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by Company and authenticated and delivered by Loan Trustee
hereunder, the valid, binding and enforceable obligations of Company; and
WHEREAS, all things necessary to make this Indenture a legal,
valid and binding obligation of Company for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
occurred;
GRANTING CLAUSE
NOW, THEREFORE, to secure the prompt and complete payment
(whether at stated maturity, by acceleration or otherwise) of principal of,
Make-Whole Amount, if any, Break Amount, if any, and interest on, the Equipment
Notes and all other amounts payable by Company under the Operative Documents and
the performance and observance by Company of all the agreements and covenants to
be performed or observed by Company for the benefit of Noteholders and Indenture
Indemnitees contained in the Operative Documents and to secure the Related
Secured Obligations under any Related Indentures, and in consideration of the
premises and of the covenants contained in the Operative Documents, and for
other good and valuable consideration given by Loan Trustee, Noteholders and
Indenture Indemnitees to Company at or before the Closing Date, the receipt of
which is hereby acknowledged, Company does hereby grant, bargain, sell, convey,
transfer, mortgage, assign, pledge and confirm unto Loan Trustee and its
successors in trust and permitted assigns, for the security and benefit of Loan
Trustee, Noteholders, Related Noteholders and Indenture Indemnitees, a first
priority security interest in, and mortgage lien on, all estate, right, title
and interest of Company in, to and under, all and
singular, the following described properties, rights, interests and privileges
whether now or hereafter acquired (hereinafter sometimes referred to as the
"Collateral"):
(1) the Aircraft, including the Airframe and the Engines,
whether or not any such Engine from time to time is installed on the
Airframe or any other airframe or any other aircraft, and any and all
Parts relating thereto, and, to the extent provided herein, all
substitutions and replacements of, and additions, improvements,
accessions and accumulations to, the Aircraft, including the Airframe,
the Engines and any and all Parts (in each case other than any
substitutions, replacements, additions, improvements, accessions and
accumulations that constitute items excluded from the definition of
Parts by clauses (b), (c), (d), (e) and (f) thereof) relating thereto
(such Airframe and Engines as more particularly described in the
Indenture Supplement executed and delivered with respect to the
Aircraft on the Closing Date or with respect to any substitutions or
replacements therefor) and together with all logs, manuals maintained
on the Aircraft, modification and maintenance records at any time
required to be maintained with respect to the Aircraft, in accordance
with the rules and regulations of the FAA if the Aircraft is registered
under the laws of the United States or the rules and regulations of the
government of the country of registry if the Aircraft is registered
under the laws of a jurisdiction other than the United States;
(2) the Warranty Rights, together with all rights,
powers, privileges, options and other benefits of Company under the
same;
(3) all requisition proceeds with respect to the Aircraft
or any Part thereof, and all insurance proceeds with respect to the
Aircraft or any Part thereof, but excluding all proceeds of, and rights
under, any insurance maintained by Company and in excess of that
required under Section 7.06(b);
(4) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with Loan Trustee
by or for the account of Company pursuant to any term of any Operative
Document and held or required to be held by Loan Trustee hereunder or
thereunder; and
(5) all proceeds of the foregoing;
PROVIDED, HOWEVER, that notwithstanding any of the foregoing
provisions, so long as no Event of Default shall have occurred and be
continuing, Company shall have the right, to the exclusion of Loan Trustee, (i)
to quiet enjoyment of the Aircraft, the Airframe, the Parts and the Engines, and
to possess, use, retain and control the Aircraft, the Airframe, the Parts and
the Engines and all revenues, income and profits derived therefrom and (ii) with
respect to the Warranty Rights, to exercise in Company's name all rights and
powers of the Buyer (as defined in the Purchase Agreement) under the Warranty
Rights and to retain any recovery or benefit resulting from the enforcement of
any warranty or indemnity or other obligation under the Warranty Rights;
provided, further, that notwithstanding the occurrence and continuation of an
Event of Default, Loan Trustee shall not enter into any amendment or
modification of the Purchase Agreement that would alter the rights, benefits or
obligations of Company thereunder;
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TO HAVE AND TO HOLD all and singular the aforesaid property
unto Loan Trustee, and its successors and permitted assigns, in trust for the
ratable benefit and security of Noteholders, Related Noteholders and Indenture
Indemnitees, except as otherwise provided in this Indenture, including Section
2.13 and Article III, without any preference, distinction or priority of any one
Equipment Note over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and in all cases and as to all property specified
in paragraphs (1) through (5) inclusive above, subject to the terms and
provisions set forth in this Indenture.
It is expressly agreed that notwithstanding anything herein to
the contrary, Company shall remain liable under the Purchase Agreement to
perform all of its obligations thereunder, and, except to the extent expressly
provided in any Operative Document, none of Loan Trustee, any Noteholders or any
Indenture Indemnitee shall be required or obligated in any manner to perform or
fulfill any obligations of Company under or pursuant to any Operative Document,
or have any obligation or liability under the Purchase Agreement by reason of or
arising out of the assignment hereunder, or to make any inquiry as to the nature
or sufficiency of any payment received by it, or present or file any claim or
take any action to collect or enforce the payment of any amount that may have
been assigned to it or to which it may be entitled at any time or times.
Notwithstanding anything herein to the contrary (but without
in any way releasing Company from any of its duties or obligations under the
Purchase Agreement), Loan Trustee, Noteholders and Indenture Indemnitees confirm
for the benefit of Manufacturer that in exercising any rights under the Warranty
Rights, or in making any claim with respect to the Aircraft or other goods and
services delivered or to be delivered pursuant to the Purchase Agreement, the
terms and conditions of the Purchase Agreement relating to the Warranty Rights,
including, without limitation, the warranty disclaimer provisions for the
benefit of Manufacturer, shall apply to and be binding upon Loan Trustee,
Noteholders and Indenture Indemnitees to the same extent as Company. Company
hereby directs Manufacturer, so long as an Event of Default shall have occurred
and be continuing, to pay all amounts, if any, payable to Company pursuant to
the Warranty Rights directly to Loan Trustee to be held and applied as provided
herein. Nothing contained herein shall subject Manufacturer to any liability to
which it would not otherwise be subject under the Purchase Agreement or modify
in any respect the contract rights of Manufacturer thereunder except as provided
in the Manufacturer's Consent.
Company does hereby irrevocably constitute Loan Trustee the
true and lawful attorney of Company (which appointment is coupled with an
interest) with full power (in the name of Company or otherwise) to ask for,
require, demand and receive any and all monies and claims for monies (in each
case including insurance and requisition proceeds) due and to become due to
Company under or arising out of the Purchase Agreement (to the extent assigned
hereby), and all other property which now or hereafter constitutes part of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings which Loan Trustee may deem to be necessary or advisable in the
premises; provided that Loan Trustee shall not exercise any such rights except
during the continuance of an Event of Default. Company agrees that promptly upon
receipt thereof, to the extent required by the Operative Documents, it will
transfer to Loan Trustee any
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and all monies from time to time received by Company constituting part of the
Collateral, for distribution by Loan Trustee pursuant to this Indenture.
Company does hereby warrant and represent that it has not
sold, assigned or pledged, and hereby covenants and agrees that it will not
sell, assign or pledge, so long as this Indenture shall remain in effect and the
Lien hereof shall not have been released pursuant to the provisions hereof, any
of its estate, right, title or interest hereby assigned, to any Person other
than Loan Trustee, except as otherwise provided in or permitted by any Operative
Document.
Company agrees that at any time and from time to time, upon
the written request of Loan Trustee, Company shall promptly and duly execute and
deliver or cause to be duly executed and delivered any and all such further
instruments and documents as Loan Trustee may reasonably deem necessary to
perfect, preserve or protect the mortgage, security interests and assignments
created or intended to be created hereby or to obtain for Loan Trustee the full
benefit of the assignment hereunder and of the rights and powers herein granted,
provided that any instrument or other document so executed by Company will not
expand any obligations or limit any rights of Company in respect of the
transactions contemplated by the Operative Documents.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. For all purposes of this Indenture,
unless the context otherwise requires, capitalized terms used but not defined
herein have the respective meanings set forth or incorporated by reference in
Annex A.
Section 1.02 Other Definitional Provisions. (a) The
definitions stated herein and in Annex A apply equally to both the singular and
the plural forms of the terms defined.
(b) All references in this Indenture to designated
"Articles", "Sections", "Subsections", "Schedules", "Exhibits", "Annexes" and
other subdivisions are to the designated Article, Section, Subsection, Schedule,
Exhibit, Annex or other subdivision of this Indenture, unless otherwise
specifically stated.
(c) The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section, Subsection, Schedule, Exhibit, Annex or other
subdivision.
(d) Unless the context otherwise requires, whenever the
words "including", "include" or "includes" are used herein, they shall be deemed
to be followed by the phrase "without limitation".
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(e) All references in this Indenture to a "government"
are to such government and any instrumentality or agency thereof.
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01 Form of Equipment Notes. The Equipment Notes
shall be substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE OFFERED FOR SALE
OR SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH
APPLICABLE STATE OR OTHER LAWS OR EXEMPTIONS FROM SUCH
REGISTRATION REQUIREMENTS ARE AVAILABLE.
DELTA AIR LINES, INC.
SERIES 2003-1 [ ] EQUIPMENT NOTE DUE [ ]
ISSUED IN CONNECTION WITH THE BOEING 767-332ER AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N195DN
No.____ Date: [______,__]
$________________
MATURITY DATE
[___________,_____]
DELTA AIR LINES, INC. (together with its successors and
permitted assigns, "Company") hereby promises to pay to ___________, or the
registered assignee thereof, the principal amount of ________________ Dollars
($_________) [on __________](1) [in installments on the Payment Dates set forth
in Schedule I hereto, each such installment to be in an amount computed by
multiplying the original principal amount of this Equipment Note by the
percentage set forth in Schedule I hereto opposite the Payment Date on which
such installment is due,](2) and to pay interest in arrears on each Payment
Date at a rate per annum for each Interest Period equal to the Debt Rate for
Series [__] for such Interest Period on the principal amount remaining unpaid
from time to time (calculated on the basis of a year of 360 days and actual
days elapsed during the period for which such amount accrues) from the date
hereof until paid in full. Interest shall be payable with respect to the first
but not the last day of each Interest Period. [Notwithstanding the foregoing,
the final payment made on this Equipment Note shall be in an amount sufficient
to discharge in full the unpaid principal amount and all accrued and unpaid
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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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interest on, and any other amounts due under, this Equipment Note.](2)
Notwithstanding anything to the contrary contained herein, if any date on which
a payment under this Equipment Note becomes due and payable is not a Business
Day, then such payment shall not be made on such scheduled date but shall be
made on the next succeeding Business Day and such extension of time shall be
included in the computation of interest payable.
For purposes hereof, the term "Indenture" means the Indenture
and Security Agreement (N195DN), dated as of January 30, 2003, between Company
and U.S. Bank Trust National Association, as Loan Trustee ("Loan Trustee"), as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms. All capitalized terms used in this Equipment Note and
not defined herein, unless the context otherwise requires, shall have the
respective meanings set forth or incorporated by reference, and shall be
construed and interpreted in the manner described, in the Indenture. This
Equipment Note shall bear interest, payable on demand, at the Past Due Rate (and
not the Debt Rate) (calculated on the basis of a year of 360 days and actual
days elapsed during which such amount accrues) on any principal amount and (to
the extent permitted by applicable law) interest and any other amounts payable
hereunder not paid when due for any period during which the same is overdue, in
each case for the period the same is overdue. Amounts shall be overdue if not
paid in the manner provided herein or in the Indenture when due (whether at
stated maturity, by acceleration or otherwise).
There shall be maintained an Equipment Note Register for the
purpose of registering transfers and exchanges of Equipment Notes at the
Corporate Trust Office of Loan Trustee, or at the office of any successor
trustee, in the manner provided in Section 2.07 of the Indenture. The principal
amount and interest and other amounts due hereunder shall be payable in Dollars
in immediately available funds at the Corporate Trust Office of Loan Trustee, or
as otherwise provided in the Indenture. Company shall not have any
responsibility for the distribution of any such payment to Noteholder of this
Equipment Note. Each such payment shall be made on the date such payment is due
and without any presentment or surrender of this Equipment Note, except that in
the case of any final payment with respect to this Equipment Note, the Equipment
Note shall be surrendered to Loan Trustee for cancellation. The holder hereof,
by its acceptance of this Equipment Note, agrees that, except as provided in the
Indenture, including the subordination provisions referred to below, each
payment of an installment of principal amount, Make-Whole Amount, if any, Break
Amount, if any, and interest received by it hereunder shall be applied: first,
to the payment of Break Amount, if any, on this Equipment Note, second, to the
payment of accrued interest on this Equipment Note (as well as any interest on
any overdue principal amount, and, to the extent permitted by law, any overdue
Make-Whole Amount, if any, any overdue interest and other overdue amounts
hereunder) to the date of such payment; third, to the payment of Make-Whole
Amount, if any, and fourth, to the payment of the principal amount of this
Equipment Note (or portion hereof) then due.
This Equipment Note is one of the Equipment Notes referred to
in the Indenture which have been or are to be issued by Company pursuant to the
terms of the Indenture. The Collateral is held by Loan Trustee as security, in
part, for the Equipment Notes. The provisions of this Equipment Note are
subject to the Indenture, the Related Indentures and the Participation
Agreement. Reference is hereby made to the Indenture, the Related Indentures
and the
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Participation Agreement for a complete statement of the rights and obligations
of the holder of, and the nature and extent of the security for, this Equipment
Note (including as a "Related Equipment Note" under each Related Indenture) and
the rights and obligations of the holders of, and the nature and extent of the
security for, any other Equipment Notes executed and delivered under the
Indenture, to all of which terms and conditions in the Indenture and the
Participation Agreement each holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate principal amount of Equipment Notes of the same Series of different
authorized denominations, as requested by the holder surrendering the same.
Prior to the due presentment for registration of transfer of this Equipment
Note, Company and Loan Trustee shall deem and treat the Person in whose name
this Equipment Note is registered on the Equipment Note Register as the absolute
owner and holder hereof for the purpose of receiving all amounts payable with
respect to this Equipment Note and for all purposes, and neither Company nor
Loan Trustee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10 and 2.11 of the Indenture but not otherwise.
[The indebtedness evidenced by this Equipment Note is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series G Equipment Notes](3) [Series G
Equipment Notes and Series C Equipment Notes](4), and this Equipment Note is
issued subject to such provisions. Noteholder of this Equipment Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs Loan Trustee on such Noteholder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints Loan Trustee such Noteholder's
attorney-in-fact for such purpose.](5)
[Without limiting the foregoing, the](6) [The](7) Noteholder
of this Equipment Note, by accepting the same, agrees that if such Noteholder,
in its capacity as a Noteholder, receives any payment or distribution on any
Secured Obligation in respect of this Equipment Note that it is not entitled to
receive under Section 2.13 or Article III of the Indenture, it shall hold any
amount so received in trust for Loan Trustee and forthwith turn over such
amount to Loan Trustee in the form received to be applied as provided in
Article III of the Indenture. Unless the certificate of authentication hereon
has been executed by or on behalf of Loan Trustee by manual signature, this
Equipment Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
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(3) To be inserted in the case of a Series C Equipment Note.
(4) To be inserted in the case of a Series D Equipment Note.
(5) To be inserted in the case of a Series C Equipment Note or a Series D
Equipment Note.
(6) To be inserted in the case of a Series C Equipment Note or a Series D
Equipment Note.
(7) To be inserted in the case of a Series G Equipment Note.
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THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, Company has caused this Equipment Note to
be executed in its corporate name by its officer thereunto duly authorized on
the date hereof.
DELTA AIR LINES, INC.
By: __________________________________
Name:
Title:
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of
the Equipment Notes referred to in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL
ASSOCIATION,
not in its individual capacity but
solely as Loan Trustee
By: __________________________________
Name:
Title:
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SCHEDULE I(8)
EQUIPMENT NOTE AMORTIZATION
Payment Date Percentage of Original
Principal Amount
to be Paid
[SEE "EQUIPMENT NOTES AMORTIZATION" ON SCHEDULE I TO
INDENTURE WHICH IS TO BE INSERTED UPON ISSUANCE]
* * *
Section 2.02 Issuance and Terms of Equipment Notes. The
Equipment Notes shall be dated the date of issuance thereof, shall be issued in
(a) three separate series consisting of Series G Equipment Notes, Series C
Equipment Notes and Series D Equipment Notes and (b) the maturities and
principal amounts and shall bear interest at the applicable Debt Rates specified
in Schedule I. On the Closing Date, each Series G Equipment Note, Series C
Equipment Note and Series D Equipment Note shall be issued to Subordination
Agent on behalf of each of Pass Through Trustees for the Pass Through Trusts
created under the Pass Through Trust Agreements referred to in Schedule II. The
Equipment Notes shall be issued in registered form only. The Equipment Notes
shall be issued in denominations of $1,000 and integral multiples thereof,
except that one Equipment Note of each Series may be in an amount that is not an
integral multiple of $1,000.
Each Equipment Note shall bear interest for each Interest
Period at the Debt Rate specified for such Interest Period for the applicable
Series (calculated on the basis of a year of 360 days and actual days elapsed
during the period for which such amount accrues), payable in arrears on each
Payment Date on the unpaid principal amount thereof from time to time
outstanding until such principal amount is paid in full, as further provided in
the form of Equipment Note set forth in Section 2.01. The principal amount of
each Series G Equipment Note and each Series D Equipment Note shall be payable
in installments on the Payment Dates and in the installments equal to the
corresponding percentage of the principal amount set forth in Schedule I hereto
applicable to such Series, which shall be attached as Schedule I to such
Equipment Note. The principal amount of each Series C Equipment Note shall be
due in a single payment on January 25, 2008. Notwithstanding the foregoing, the
final payment made under each Series G Equipment Note and each Series D
Equipment Note shall be in an amount sufficient to discharge in full the unpaid
principal amount and all accrued and unpaid interest on, and any other amounts
due under, such Equipment Note. Each Equipment Note shall bear interest, payable
on demand, at the Past Due Rate (and not at the Debt Rate) (calculated on the
basis of a year of 360 days and actual days elapsed during the period for which
such amount accrues) on any principal amount and (to the extent permitted by
applicable law) interest and any other amounts payable thereunder not paid when
due for any period during which the same is overdue, in each case for the period
the same is overdue. Amounts shall be overdue under an Equipment Note if not
paid in the manner provided therein or in this Indenture when due (whether at
stated maturity, by acceleration or otherwise). Notwithstanding anything to the
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(8) To be inserted on installment Equipment Notes.
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contrary contained herein, if any date on which a payment hereunder or under any
Equipment Note becomes due and payable is not a Business Day, then such payment
shall not be made on such scheduled date but shall be made on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date, and such extension of time shall be included in the computation
of interest payable.
The Equipment Notes shall be executed on behalf of Company by
the manual or facsimile signature of one of its authorized officers. Equipment
Notes bearing the signatures of individuals who were at the time of execution
the proper officers of Company shall bind Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Equipment Notes or did not hold such offices
at the respective dates of such Equipment Notes. No Equipment Note shall be
secured by or entitled to any benefit under this Indenture or be valid or
obligatory for any purposes unless there appears on such Equipment Note a
certificate of authentication in the form provided herein executed by Loan
Trustee by the manual signature of one of its authorized officers, and such
certificate upon any Equipment Notes shall be conclusive evidence, and the only
evidence, that such Equipment Note has been duly authenticated and delivered
hereunder.
Section 2.03 Method of Payment. The principal amount of,
interest on, Make-Whole Amount, if any, and, except to the extent expressly
provided herein, all other amounts due to any Noteholder under each Equipment
Note or otherwise payable hereunder shall be payable by Company in Dollars by
wire transfer of immediately available funds not later than 10:00 a.m. (New York
City time) on the due date of payment to Loan Trustee at the Corporate Trust
Office for distribution among Noteholders in the manner provided herein. Company
shall not have any responsibility for the distribution of such payment to any
Noteholder. Notwithstanding the foregoing or any provision in any Equipment Note
to the contrary, Loan Trustee will use reasonable efforts to pay or cause to be
paid, if so directed in writing by any Noteholder (with a copy to Company), all
amounts paid by Company hereunder and under such Noteholder's Equipment Note or
Equipment Notes to such Noteholder or a nominee therefor (including all amounts
distributed pursuant to Article III) by transferring, or causing to be
transferred, by wire transfer of immediately available funds in Dollars, prior
to 12:00 noon (New York City time) on the due date of payment, to an account
maintained by such Noteholder with a bank located in the continental United
States the amount to be distributed to such Noteholder, for credit to the
account of such Noteholder maintained at such bank; provided that, in the event
the Equipment Notes are not held by Subordination Agent on behalf of Pass
Through Trustees, Loan Trustee may at its option pay such amounts by check
mailed to Noteholder's address as it appears on the Equipment Note Register. If,
after its receipt of funds at the place and prior to the time specified above in
the immediately preceding sentence, Loan Trustee fails (other than as a result
of a failure of Noteholder to provide it with wire transfer instructions) to
make any such payment required to be paid by wire transfer as provided in the
immediately preceding sentence on the Business Day it receives such funds, Loan
Trustee, in its individual capacity and not as trustee, agrees to compensate
such Noteholders for loss of use of funds at the Federal Funds Rate until such
payment is made and Loan Trustee shall be entitled to any interest earned on
such funds until such payment is made. Any payment made hereunder shall be made
without any presentment or surrender of any Equipment Note, except that, in the
case of the final payment in respect of any Equipment Note, such Equipment Note
shall be surrendered to Loan Trustee for cancellation. Notwithstanding any other
provision of this Indenture to the contrary, Loan Trustee
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shall not be required to make, or cause to be made, wire transfers as aforesaid
prior to the first Business Day on which it is practicable for Loan Trustee to
do so in view of the time of day when the funds to be so transferred were
received by it if such funds were received after 1:00 p.m. (New York City time)
at the place of payment.
Section 2.04 Withholding Taxes. Loan Trustee shall exclude and
withhold at the appropriate rate from each payment of principal amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Equipment Note (which exclusion and withholding shall constitute payment of
such amounts payable hereunder or in respect of such Equipment Notes, as
applicable) any and all withholding taxes applicable thereto as required by law.
Loan Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future taxes or similar charges are required
to be withheld with respect to any amounts payable hereunder or in respect of
the Equipment Notes, to withhold such amounts (which withholding shall
constitute payment of such amounts payable hereunder or in respect of such
Equipment Notes, as applicable) and timely pay the same to the appropriate
authority in the name of and on behalf of Noteholders, that it will file any
necessary withholding tax returns or statements when due, and that as promptly
as possible after the payment thereof it will deliver to each Noteholder (with a
copy to Company) appropriate documentation showing the payment thereof, together
with such additional documentary evidence as any such Noteholder may reasonably
request from time to time. Loan Trustee agrees to file any other information
reports it is required to file under United States law.
Section 2.05 Application of Payments. Subject always to
Section 2.13 and except as otherwise provided in Article III, in the case of
each Equipment Note, each payment of an installment of principal amount,
Make-Whole Amount, if any, Break Amount, if any, and interest paid thereon shall
be applied:
FIRST, to the payment of Break Amount, if any, with respect to
such Equipment Note; and
SECOND, to the payment of accrued interest on such Equipment
Note (as well as any interest on any overdue principal amount and (to
the extent permitted by law) any overdue Make-Whole Amount, if any, any
overdue interest and any other overdue amounts thereunder) to the date
of such payment; and
THIRD, to the payment of Make-Whole Amount, if any; and
FOURTH, to the payment of principal amount of such Equipment
Note (or portion thereof) then due thereunder.
Section 2.06 Termination of Interest in Collateral. No
Noteholder, Related Noteholder or Indenture Indemnitee shall, as such, have any
further interest in, or other right with respect to, the Collateral when and if
(i) the principal amount of, Make-Whole Amount, if any, and interest (including
interest on any overdue amounts) on and all other amounts due under all
Equipment Notes held by such Noteholder and all other sums then payable to such
Noteholder or Indenture Indemnitee, as the case may be, hereunder and under the
Participation Agreement by Company, and (ii) amounts (if any) available for
distribution in accordance with
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clause "fourth" of Section 3.03 hereof ((i) and (ii) collectively, "Secured
Obligations") have been paid in full.
Section 2.07 Registration, Transfer and Exchange of Equipment
Notes. Loan Trustee shall keep a register or registers (the "Equipment Note
Register") in which Loan Trustee shall provide for the registration of Equipment
Notes and the registration of transfers of Equipment Notes. No such transfer
shall be given effect unless and until registration hereunder shall have
occurred. The Equipment Note Register shall be kept at the Corporate Trust
Office of Loan Trustee. Loan Trustee is hereby appointed "Equipment Note
Registrar" for the purpose of registering Equipment Notes and transfers of
Equipment Notes. A holder of any Equipment Note intending to exchange or
transfer such Equipment Note shall surrender such Equipment Note to Loan Trustee
at the Corporate Trust Office, together with a written request from the
registered holder thereof for the issuance of a new Equipment Note of the same
Series, specifying, in the case of a surrender for transfer, the name and
address of the new holder or holders. Upon surrender for registration of
transfer of any Equipment Note and subject to satisfaction of Section 2.09,
Company shall execute, and Loan Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Equipment
Notes of an equal aggregate principal amount and of the same Series. At the
option of Noteholder, Equipment Notes may be exchanged for other Equipment Notes
of the same Series of any authorized denominations of an equal aggregate
principal amount, upon surrender of the Equipment Notes to be exchanged to Loan
Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so
surrendered for exchange, Company shall execute, and Loan Trustee shall
authenticate and deliver, the Equipment Notes which Noteholder making the
exchange is entitled to receive. All Equipment Notes issued upon any
registration of transfer or exchange of Equipment Notes (whether under this
Section 2.07 or under Section 2.08 or otherwise under this Indenture) shall be
the valid obligations of Company evidencing the same respective obligations, and
entitled to the same security and benefits under this Indenture, as the
Equipment Notes surrendered upon such registration of transfer or exchange.
Every Equipment Note presented or surrendered for registration of transfer shall
be duly endorsed or be accompanied by a written instrument of transfer in form
satisfactory to Loan Trustee, duly executed by Noteholder or such Noteholder's
attorney duly authorized in writing, and Loan Trustee shall require evidence
satisfactory to it as to the compliance of any such transfer with the Securities
Act of 1933, as amended, and the securities laws of any applicable state or
jurisdiction. Loan Trustee shall make a notation on each new Equipment Note of
the amount of all payments of principal amount previously made on the old
Equipment Note or Equipment Notes with respect to which such new Equipment Note
is issued and the date to which interest on such old Equipment Note or Equipment
Notes has been paid. Principal, interest and all other amounts shall be deemed
to have been paid on such new Equipment Note to the date on which such amounts
have been paid on such old Equipment Note. Company shall not be required to
exchange any surrendered Equipment Notes as provided above (a) during the
ten-day period preceding the due date of any payment on such Equipment Note or
(b) that has been called for redemption. Company and Loan Trustee shall in all
cases deem and treat the Person in whose name any Equipment Note has been issued
and registered on the Equipment Note Register as the absolute owner and
Noteholder of such Equipment Note for the purpose of receiving payment of all
amounts payable with respect to such Equipment Note and for all other purposes,
and neither Company nor Loan Trustee shall be affected by any notice to the
contrary. Loan Trustee will promptly notify Company of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment
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Note, agrees to the provisions of the Operative Documents applicable to
Noteholders, and shall be deemed to have represented, warranted and covenanted
to the parties to the Participation Agreement as to the matters represented,
warranted and covenanted by Noteholders, including Pass Through Trustees, in the
Participation Agreement. Subject to compliance by Noteholder and any transferee
of the requirements set forth in this Section 2.07 and in Section 2.09, Loan
Trustee and Company shall use all reasonable efforts to issue new Equipment
Notes upon transfer or exchange within ten Business Days of the date an
Equipment Note is surrendered for transfer or exchange.
Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment
Notes. If any Equipment Note becomes mutilated, destroyed, lost or stolen,
Company shall, upon the written request of the holder of such Equipment Note and
subject to satisfaction of this Section 2.08 and of Section 2.09, execute and
Loan Trustee shall authenticate and deliver in replacement thereof a new
Equipment Note of the same Series, payable in the same principal amount, dated
the same date and captioned as issued in connection with the Aircraft. If the
Equipment Note being replaced has become mutilated, such Equipment Note shall be
surrendered to Loan Trustee, and a photocopy thereof shall be furnished to
Company. If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to Company and Loan
Trustee such security or indemnity as may be required by them to save Company
and Loan Trustee harmless and evidence satisfactory to Company and Loan Trustee
of the destruction, loss or theft of such Equipment Note and of the ownership
thereof.
Section 2.09 Payment of Expenses on Transfer; Cancellation.
(a) No service charge shall be made to a Noteholder for any registration of
transfer or exchange of Equipment Notes, but Loan Trustee, as Equipment Note
Registrar, may require payment of a sum sufficient to cover any Tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes.
(b) Loan Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange, payment or
cancellation, shall keep a copy of such canceled Equipment Notes, and shall send
the original canceled Equipment Notes marked "canceled" to Company.
Section 2.10 Mandatory Redemption of Equipment Notes. (a)
Company shall redeem the Equipment Notes in whole in connection with an Event of
Loss in respect of the Airframe or the Airframe and the Engines installed
thereon (unless Company has performed the option set forth in Section 7.05(a)(i)
with respect thereto) on or before the Loss Payment Date at a redemption price
equal to 100% of the unpaid principal amount thereof, together with all accrued
interest thereon to (but excluding) the date of redemption, Break Amount, if any
(but excluding any Make-Whole Amount) and all other Secured Obligations (other
than any Related Secured Obligations) owed or then due and payable to
Noteholders.
(b) Intentionally Omitted.
(c) Company shall redeem the Equipment Notes in whole or
in part in connection with the receipt of payments made by a Related Loan
Trustee pursuant to clause "fourth" of Section 3.03 of a Related Indenture.
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Section 2.11 Voluntary Redemption of Equipment Notes. So long
as no "Payment Default" exists under any Related Indenture (as such term is
defined in each such Related Indenture), all, but not less than all, of the
Equipment Notes may be redeemed in whole by Company upon at least 20 days'
revocable prior written notice to Loan Trustee at a redemption price equal to
100% of the unpaid principal amount of the Equipment Notes being redeemed,
together with accrued interest thereon to (but excluding) the date of
redemption, Break Amount, if any, Make-Whole Amount, if any, and all other
Secured Obligations (other than any Related Secured Obligations) owed or then
due and payable to Noteholders. Any notice shall become irrevocable three days
before the redemption date if not previously revoked.
Section 2.12 Redemptions; Notice of Redemptions; Repurchases.
(a) No redemption of any Equipment Note may be made except to the extent and in
the manner expressly permitted by this Indenture. At such time as no Pass
Through Certificates are outstanding, Company may at any time repurchase any of
the Equipment Notes at any price in the open market and may hold, resell or
surrender such Equipment Notes to Loan Trustee for cancellation.
(b) Notice of redemption with respect to the Equipment
Notes, other than redemptions made pursuant to Section 2.10(c), shall be given
by Loan Trustee by first-class mail, postage prepaid, mailed not less than 15
nor more than 60 days prior to the applicable redemption date, to each
Noteholder at such Noteholder's address appearing in the Equipment Note
Register. All notices of redemption shall state: (1) the redemption date, (2)
the applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such
Equipment Note, and that, if any such Equipment Notes are then outstanding,
interest on such Equipment Notes shall cease to accrue on and after such
redemption date and (4) the place or places where such Equipment Notes are to be
surrendered for payment of the redemption price.
(c) On or before the redemption date, Company (or any
person on behalf of Company) shall, to the extent an amount equal to the
redemption price for the Equipment Notes to be redeemed on the redemption date
shall not then be held in the Collateral, deposit or cause to be deposited with
Loan Trustee by 10:00 a.m. (New York City time) on the redemption date in
immediately available funds the redemption price of the Equipment Notes to be
redeemed.
(d) Notice of redemption having been given as aforesaid
(and not revoked as permitted by Section 2.11), the Equipment Notes to be
redeemed shall, on the redemption date, become due and payable at the Corporate
Trust Office of Loan Trustee, and from and after such redemption date (unless
there is a default in the deposit of the redemption price pursuant to Section
2.12(c)) any such Equipment Notes then outstanding shall cease to bear interest.
Upon surrender of any such Equipment Note for redemption in accordance with said
notice, such Equipment Note shall be redeemed at the redemption price.
(e) Any redemption in part of any Series of Equipment
Notes made pursuant to Section 2.10(c) shall be made pro rata on the basis of
unpaid principal amount of such Series of Equipment Notes being redeemed.
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Section 2.13 Subordination. (a) The indebtedness evidenced by
the Series C Equipment Notes is, to the extent and in the manner provided in
this Indenture, subordinate and subject in right of payment to the prior payment
in full of the Secured Obligations in respect of the Series G Equipment Notes,
and the Series C Equipment Notes are issued subject to such provisions. The
indebtedness evidenced by the Series D Equipment Notes is, to the extent and in
the manner provided in this Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations in respect of
the Series G Equipment Notes and the Series C Equipment Notes, and the Series D
Equipment Notes are issued subject to such provisions. By acceptance of its
Equipment Notes of any Series, each Noteholder of such Series (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs Loan Trustee on
such Noteholder's behalf to take any action necessary or appropriate to
effectuate the subordination as provided in this Indenture and (c) appoints Loan
Trustee as such Noteholder's attorney-in-fact for such purpose.
(b) Company, Loan Trustee and, by acceptance of its
Equipment Notes of any Series, each Noteholder of such Series, hereby agree that
no payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Noteholder of such Series, including any payment or
distribution of cash, property or securities, after the occurrence of any of the
events referred to in Section 4.01(f) or after the commencement of any
proceedings of the type referred to in Sections 4.01(g), (h) or (i), except as
expressly provided in Article III.
(c) By the acceptance of its Equipment Notes of any
Series, each Noteholder of such Series agrees that if such Noteholder, in its
capacity as a Noteholder, receives any payment or distribution on any Secured
Obligations in respect of such Series that it is not entitled to receive under
this Section 2.13 or Article III hereof, it will hold any amount so received in
trust for Loan Trustee and forthwith turn over such amount to Loan Trustee in
the form received to be applied as provided in Article III.
Section 2.14 Certain Payments. Company agrees to pay to Loan
Trustee for distribution in accordance with Section 3.04:
(a) an amount or amounts equal to the fees payable to
Primary Liquidity Provider under Section 2.03 of the Primary Liquidity Facility
and the related Fee Letter (as defined in the Intercreditor Agreement),
multiplied by a fraction, the numerator of which is the sum of the then
outstanding aggregate principal amount of the Series G Equipment Notes and the
denominator of which is the sum of the then outstanding aggregate principal
amount of all "Series G Equipment Notes" (as defined in the Intercreditor
Agreement);
(b) if any payment default shall have occurred and be
continuing with respect to interest on any Series G Equipment Note, (x) the
excess, if any, of (1) the amount equal to the sum of interest on any Unpaid
Advance or Applied Provider Advance payable under Section 3.07 of the Primary
Liquidity Facility plus any other amounts payable in respect of such Unpaid
Advance or Applied Provider Advance under Section 3.01, 3.03 or 3.09 of the
Primary Liquidity Facility (or, if Policy Provider has made a payment equivalent
to such an Advance as would have been payable under Section 3.07 of the Primary
Liquidity Facility in respect of the Class G Certificates had such Advance been
made) under which such Unpaid Advance or Applied Provider Advance was made over
(2) the sum of Investment Earnings from any Final Advance
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plus any amount of interest at the Past Due Rate actually payable (whether or
not in fact paid) by Company in respect of the overdue scheduled interest on the
"Series G Equipment Notes" (as defined in the Intercreditor Agreement) was made,
multiplied by (y) a fraction, the numerator of which is the then aggregate
overdue amounts of interest on the Series G Equipment Notes (other than interest
becoming due and payable solely as a result of acceleration of any such
Equipment Notes) and the denominator of which is the then aggregate overdue
amounts of interest on all "Series G Equipment Notes", (as defined in the
Intercreditor Agreement) (other than interest becoming due and payable solely as
a result of acceleration of any such "Series G Equipment Notes");
(c) any amounts owed to Primary Liquidity Provider by
Subordination Agent as borrower under Section 3.01 (other than in respect of an
Unpaid Advance or Applied Provider Advance), 3.03 (other than in respect of an
Unpaid Advance or Applied Provider Advance), 7.05 and 7.07 of the Primary
Liquidity Facility (or similar provisions of any Replacement Primary Liquidity
Facility) multiplied by the fraction specified in the foregoing clause (a);
(d) an amount or amounts equal to the compensation,
including reasonable expenses and disbursements actually incurred, payable to
Subordination Agent under Section 6.07 of the Intercreditor Agreement,
multiplied by the fraction specified in the foregoing clause (a) (but in any
event without duplication of any amount or amounts payable by Company in respect
of such compensation under any other Operative Document or Pass Through
Document); and
(e) an amount or amounts equal to all compensation and
reimbursement of fees, expenses and disbursements (including payment of
indemnities) owed to Policy Provider under the Policy Provider Agreement and any
Policy Provider Interest Amount, multiplied by the fraction specified in the
foregoing clause (a).
For purposes of this paragraph, the terms "Applied Provider
Advance", "Cash Collateral Account", "Class G Certificates", "Final Advance",
"Investment Earnings", "Policy Provider Interest Amount", "Replacement Primary
Liquidity Facility" and "Unpaid Advance" have the meanings specified in the
Primary Liquidity Facility or the Intercreditor Agreement.
Section 2.15 Repayment of Monies for Equipment Note Payments
Held by Loan Trustee. Any money held by Loan Trustee in trust for any payment of
the principal of, Make-Whole Amount, if any, Break Amount, if any, or interest
or any other amounts due on, any Equipment Note, including, without limitation,
any money deposited pursuant to Section 2.12(c) or Section 10.01, and remaining
unclaimed for a 730-day period (for purposes of calculating this 730-day period,
all days on which the payment of such money shall not have been made because of
operation of law shall be excluded) after the due date for such payment (or such
lesser time as Loan Trustee is satisfied, after 60 days' notice from Company, is
one month prior to the escheat period provided under applicable state law) shall
be paid to Company. Noteholders of any outstanding Equipment Notes shall
thereafter, as unsecured general creditors, look only to Company for payment
thereof, and all liability of Loan Trustee with respect to such trust money
shall thereupon cease. Loan Trustee, before being required to make any such
repayment, may at the expense of Company cause to be mailed to each such
Noteholder notice that such money remains unclaimed. After a date specified in
such notice, which may not be less than 30 days
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from the date of mailing, any unclaimed balance of such money then remaining
will be repaid to Company as provided herein.
Section 2.16 Directions by Subordination Agent. So long as
Subordination Agent is a Noteholder, notwithstanding anything contained herein
or in any other Operative Document to the contrary, in exercising its right to
vote the Equipment Notes held by it, or in giving or taking any direction,
consent, request, demand, instruction, authorization, notice, waiver or other
action provided by this Indenture or in respect of the Equipment Notes to be
given or taken by a Noteholder (each such vote or other action, a "Direction")
in respect of such Equipment Notes, Subordination Agent may act in accordance
with any votes, directions, consents, requests, demands, instructions,
authorizations, notices, waivers or other actions given or taken by any
applicable Pass Through Trustee or the Controlling Party pursuant to the
Intercreditor Agreement, including without limitation pursuant to Section 2.06,
Article IV or Section 8.01(b) thereof. Subordination Agent shall be permitted
(x) to give a Direction with respect to less than the entire principal amount of
any single Equipment Note held by it, and (y) to give different Directions with
respect to different portions of the principal amount of any single Equipment
Note held by it. Any Direction given by Subordination Agent at any time with
respect to more than a majority in aggregate unpaid principal amount of all of
the Equipment Notes issued and then outstanding hereunder shall be deemed to
have been given by a Majority in Interest of Noteholders.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE COLLATERAL
Section 3.01 Basic Distributions. Except as otherwise provided
in Sections 3.02, 3.03 and 3.04, each periodic payment by Company of regularly
scheduled installments of principal or interest on the Equipment Notes received
by Loan Trustee shall be promptly distributed in the following order of
priority:
FIRST, so much of such payment as is required to pay in full
the aggregate amount of the payment or payments of principal amount and
interest (as well as any interest on any overdue principal amount and,
to the extent permitted by applicable law, on any overdue interest and
any other overdue amounts) then due under all Series G Equipment Notes
shall be distributed to Noteholders of Series G Equipment Notes
ratably, without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series G
Equipment Note bears to the aggregate amount of the payments then due
under all Series G Equipment Notes;
SECOND, after giving effect to clause "first" above, so much
of such payment remaining as is required to pay in full the aggregate
amount of the payment or payments of principal amount and interest (as
well as any interest on any overdue principal amount and, to the extent
permitted by applicable law, on any overdue interest and other overdue
amounts) then due under all Series C Equipment Notes shall be
distributed to Noteholders of Series C Equipment Notes ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each
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Series C Equipment Note bears to the aggregate amount of the payments
then due under all Series C Equipment Notes;
THIRD, after giving effect to clause "second" above, so much
of such payment remaining as is required to pay in full the aggregate
amount of the payment or payments of principal amount and interest (as
well as any interest on any overdue principal amount and, to the extent
permitted by applicable law, on any overdue interest and any other
overdue amounts) then due under all Series D Equipment Notes shall be
distributed to Noteholders of Series D Equipment Notes ratably, without
priority of one over the other, in the proportion that the amount of
such payment or payments then due under each Series D Equipment Note
bears to the aggregate amount of the payments then due under all Series
D Equipment Notes; and
FOURTH, the balance, if any, of such installment remaining
thereafter shall be distributed to Company.
Section 3.02 Event of Loss; Mandatory Redemption; Optional
Redemption. Except as otherwise provided in Sections 3.03 and 3.04 and subject
to the following proviso, any payments received by Loan Trustee with respect to
the Aircraft as the result of (a) an Event of Loss (including amounts paid by
Company pursuant to Section 2.10(a)), (b) a mandatory redemption of the
Equipment Notes pursuant to Section 2.10(c) or (c) an optional redemption of the
Equipment Notes pursuant to Section 2.11 shall be applied to redemption of the
Equipment Notes pursuant to Section 2.10 or Section 2.11, as applicable, and to
payment of all other Secured Obligations by applying such funds in the following
order of priority:
FIRST, (i) to reimburse Loan Trustee and Noteholders for any
reasonable costs or expenses actually incurred in connection with such
redemption for which they are entitled to reimbursement, or indemnity
by Company, under the Operative Documents; and then (ii) to pay any
other amounts then due (except as provided in clause "second" below) to
Loan Trustee, Noteholders and Indenture Indemnitees under this
Indenture, the Participation Agreement or the Equipment Notes;
SECOND, (i) so much of such payments or amounts remaining as
is required to pay in full the aggregate unpaid principal amount of all
Series G Equipment Notes and the accrued but unpaid interest thereon,
Break Amount, if any, with respect to the Series G Equipment Notes and
all other Secured Obligations in respect of the Series G Equipment
Notes to the date of distribution shall be distributed to Noteholders
of Series G Equipment Notes ratably, without priority of one over the
other, in the proportion that the aggregate unpaid principal amount of
all Series G Equipment Notes held by each Noteholder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder to
the date of distribution bears to the aggregate unpaid principal amount
of all Series G Equipment Notes held by all such Noteholders plus the
accrued but unpaid interest and other amounts due thereon to the date
of distribution; (ii) after giving effect to subclause (i) above, so
much of such payments or amounts remaining as is required to pay in
full the aggregate unpaid principal amount of all Series C Equipment
Notes and the accrued but unpaid interest thereon, Break Amount, if
any, with respect to the Series C
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Equipment Notes and all other Secured Obligations in respect of the Series C
Equipment Notes to the date of distribution shall be distributed to Noteholders
of Series C Equipment Notes ratably, without priority of one over the other, in
the proportion that the aggregate unpaid principal amount of all Series C
Equipment Notes held by each Noteholder plus the accrued but unpaid interest and
other amounts due hereunder or thereunder to the date of distribution bears to
the aggregate unpaid principal amount of all Series C Equipment Notes held by
all such Noteholders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution; and (iii) after giving effect to subclause
(ii) above, so much of such payments or amounts remaining as is required to pay
in full the aggregate unpaid principal amount of all Series D Equipment Notes
and the accrued but unpaid interest thereon, Break Amount, if any, with respect
to the Series D Equipment Notes and all other Secured Obligations in respect of
the Series D Equipment Notes to the date of distribution shall be distributed to
Noteholders of Series D Equipment Notes, ratably, without priority of one over
the other, in the proportion that the aggregate unpaid principal amount of all
Series D Equipment Notes held by each Noteholder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder to the date of
distribution bears to the aggregate unpaid principal amount of all Series D
Equipment Notes held by all such Noteholders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution; and
THIRD, the balance, if any, of such payments shall be
distributed to Company.
Notwithstanding the foregoing, any insurance, condemnation or similar proceeds
resulting from an Event of Loss that are received by Loan Trustee shall be held
or disbursed by Loan Trustee as provided by Sections 7.05(c) and 7.06(d). Any
such money held by Loan Trustee shall be invested as provided in Section 5.06.
No Make-Whole Amount shall be payable on the Equipment Notes
in connection with their redemption as a result of (i) an Event of Loss in
respect of the Airframe or the Airframe and the Engines installed thereon, or
(ii) a mandatory redemption of Equipment Notes pursuant to Section 2.10(c).
Section 3.03 Payments after Event of Default. Except as
otherwise provided in Section 3.04, all payments received and amounts held or
realized by Loan Trustee (including any amounts realized by Loan Trustee from
the exercise of any remedies pursuant to Article IV) after both an Event of
Default shall have occurred and be continuing and the Equipment Notes shall have
become due and payable pursuant to Section 4.02(a), as well as all payments or
amounts then held by Loan Trustee as part of the Collateral, shall be promptly
distributed by Loan Trustee in the following order of priority:
FIRST, so much of such payments or amounts as is required (i)
to reimburse Loan Trustee, to the extent Loan Trustee is entitled to be
reimbursed or indemnified under the Operative Documents, for any Tax,
expense or other loss (including, without limitation, all amounts to be
expended at the expense of, or charged upon the tolls, rents, revenues,
issues, products and profits of, the Collateral and every part thereof
pursuant to Section 4.02(a)) actually incurred by Loan Trustee (to the
extent not previously reimbursed), the expenses of any sale, taking or
other proceeding, reasonable attorneys' fees and expenses, court costs
and any other expenditures actually incurred or expenditures or
advances
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made by Loan Trustee or Noteholders in the protection, exercise or
enforcement of any right, power or remedy or any damages sustained by
Loan Trustee or any Noteholder, liquidated or otherwise, upon such
Event of Default shall be applied by Loan Trustee as between itself and
Noteholders in reimbursement of such expenses and any other expenses
for which Loan Trustee or Noteholders are entitled to reimbursement
under any Operative Document, and (ii) to pay all amounts payable
(except as provided in clauses "second", "third" and "fourth" below) to
the other Indenture Indemnitees hereunder and under the Participation
Agreement; and in case the aggregate amount so to be distributed is
insufficient to pay as aforesaid, then ratably, without priority of one
over the other, in proportion to the amounts owed each hereunder;
SECOND, so much of such payments or amounts remaining as is
required to reimburse the then existing or prior Noteholders for
payments made pursuant to Section 5.03 (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Noteholders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each such
then existing or prior Noteholder pursuant to Section 5.03;
THIRD, (i) so much of such payments or amounts remaining as is
required to pay in full the aggregate unpaid principal amount of all
Series G Equipment Notes and the accrued but unpaid interest thereon,
Break Amount, if any, with respect to the Series G Equipment Notes and
all other Secured Obligations in respect of the Series G Equipment
Notes to the date of distribution shall be distributed to Noteholders
of Series G Equipment Notes ratably, without priority of one over the
other, in the proportion that the aggregate unpaid principal amount of
all Series G Equipment Notes held by each Noteholder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder to
the date of distribution bears to the aggregate unpaid principal amount
of all Series G Equipment Notes held by all such Noteholders plus the
accrued but unpaid interest and other amounts due thereon to the date
of distribution; (ii) after giving effect to subclause (i) above, so
much of such payments or amounts remaining as is required to pay in
full the aggregate unpaid principal amount of all Series C Equipment
Notes and the accrued but unpaid interest thereon, Break Amount, if
any, with respect to the Series C Equipment Notes and all other Secured
Obligations in respect of the Series C Equipment Notes to the date of
distribution shall be distributed to Noteholders of Series C Equipment
Notes ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all Series C
Equipment Notes held by each Noteholder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder to the date of
distribution bears to the aggregate unpaid principal amount of all
Series C Equipment Notes held by all such Noteholders plus the accrued
but unpaid interest and other amounts due thereon to the date of
distribution; and (iii) after giving effect to subclause (ii) above, so
much of such payments or amounts remaining as is required to pay in
full the aggregate unpaid principal amount of all Series D Equipment
Notes and the accrued but unpaid interest thereon, Break Amount, if
any, with respect to the Series D Equipment Notes and all other Secured
Obligations in respect of the Series D Equipment Notes to the date of
distribution shall be distributed to Noteholders of Series D Equipment
Notes, ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all Series D
Equipment Notes
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held by each Noteholder plus the accrued but unpaid interest and other
amounts due hereunder or thereunder to the date of distribution bears
to the aggregate unpaid principal amount of all Series D Equipment
Notes held by all such Noteholders plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution;
FOURTH, (i) so much of such payments or amounts remaining as
is required to pay in full the aggregate unpaid principal amount of all
Related Series G Core Equipment Notes and the accrued but unpaid
interest thereon, Break Amount, if any, with respect to such Related
Series G Core Equipment Notes and all other Related Secured Obligations
in respect of the Related Series G Core Equipment Notes to the date of
distribution shall be distributed to Related Loan Trustees for further
distribution to Related Noteholders of Related Series G Core Equipment
Notes ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all Related
Series G Core Equipment Notes held by each holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder to the
date of distribution bears to the aggregate unpaid principal amount of
all Related Series G Core Equipment Notes held by all such holders plus
the accrued but unpaid interest and other amounts due thereon to the
date of distribution; (ii) after giving effect to subclause (i) above,
so much of such payments or amounts remaining as is required to pay in
full the aggregate unpaid principal amount of all remaining Related
Series G Non-Core Equipment Notes and the accrued but unpaid interest
thereon, Break Amount, if any, with respect to the Related Series G
Non-Core Equipment Notes and all other Related Secured Obligations in
respect of the Related Series G Non-Core Equipment Notes to the date of
distribution shall be distributed to Related Loan Trustees for further
distribution to Related Noteholders of Related Series G Non-Core
Equipment Notes ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all Related
Series G Non-Core Equipment Notes held by each holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder to
the date of distribution bears to the aggregate unpaid principal amount
of all Related Series G Non-Core Equipment Notes held by all such
holders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution; (iii) after giving effect to
subclause (ii) above, so much of such payments or amounts remaining as
is required to pay in full all Related Secured Obligations in respect
of Related Series C Equipment Notes issued under any Related Indenture
then due shall be distributed to Related Loan Trustees for further
distribution to Related Noteholders of Related Series C Equipment Notes
ratably, without priority of one over the other, in the proportion that
the aggregate unpaid amount of all Related Secured Obligations in
respect of such Related Series C Equipment Notes then due held by such
holder bears to the aggregate unpaid amount of all other Related
Secured Obligations in respect of such Related Series C Equipment Notes
then due; and (iv) after giving effect to subclause (iii) above, so
much of such payments or amounts remaining as is required to pay in
full all Related Secured Obligations in respect of Related Series D
Equipment Notes issued under any Related Indenture then due shall be
distributed to Related Loan Trustees for further distribution to
Related Noteholders of Related Series D Equipment Notes ratably,
without priority of one over the other, in the proportion that the
aggregate unpaid amount of all Related Secured Obligations in respect
of such Related Series D Equipment Notes then due held by such holder
bears to the aggregate unpaid
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amount of all other Related Secured Obligations in respect of such
Related Series D Equipment Notes then due; and
FIFTH, the balance, if any, of such payments or amounts shall
be distributed to Company.
No Make-Whole Amount shall be payable on the Equipment Notes
as a consequence of or in connection with an Event of Default or the
acceleration of the Equipment Notes.
Section 3.04 Certain Payments. (a) Any payments received by
Loan Trustee for which provision as to the application thereof is made in this
Indenture other than in this Article III shall be applied as provided in those
provisions. Without limiting the foregoing, any payments received by Loan
Trustee which are payable to Company pursuant to any of the provisions of this
Indenture other than those set forth in this Article III (including Sections
5.06, 7.05 and 7.06 hereof) shall be so paid to Company. Any payments received
by Loan Trustee for which no provision as to the application thereof is made in
this Indenture and for which such provision is made in any other Operative
Document shall be applied forthwith to the purpose for which such payment was
made in accordance with the terms of such other Operative Document.
(b) Loan Trustee will distribute promptly upon receipt
any indemnity payment received by it from Company pursuant to Section 4.02 of
the Participation Agreement in respect of (i) U.S. Bank and Loan Trustee, (ii)
Subordination Agent, (iii) any separate or successor trustee appointed pursuant
to Section 8.02 hereof, (iv) Pass Through Trustees, (v) either Liquidity
Provider and (vi) Policy Provider, in each case, directly to the Person entitled
thereto. Any payment received by Loan Trustee from Company under Section 2.14
shall be distributed to Subordination Agent to be distributed in accordance with
Section 2.03(c) of the Intercreditor Agreement.
(c) Any payments received by Loan Trustee not
constituting part of the Collateral or otherwise for which no provision as to
the application thereof is made in any Operative Document shall be distributed
by Loan Trustee to Company. Further, and except as otherwise provided in
Sections 3.02, 3.03 and 3.04, all payments received and amounts realized by Loan
Trustee with respect to the Aircraft, to the extent received or realized at any
time after payment in full of all Secured Obligations, as well as any amounts
remaining as part of the Collateral after the occurrence of such payment in
full, shall be distributed by Loan Trustee to Company.
Section 3.05 Payments to Company. Any amounts distributed
hereunder by Loan Trustee to Company shall be paid to Company (within the time
limits contemplated by Section 2.03) by wire transfer of funds of the type
received by Loan Trustee at such office and to such account or accounts of such
entity or entities as shall be designated by notice from Company to Loan Trustee
from time to time.
Section 3.06 Cooperation. Prior to making any distribution
under this Article III, Loan Trustee shall consult with Related Loan Trustees to
determine amounts payable with respect to the Related Secured Obligations. Loan
Trustee shall cooperate with Related Loan
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Trustees and shall provide such information as shall be reasonably requested by
each Related Loan Trustee to enable such Related Loan Trustee to determine
amounts distributable under Article III of its Related Indenture.
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
Section 4.01 Events of Default. Each of the following events
constitutes an "Event of Default" whether such event is voluntary or involuntary
or comes about or is effected by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body and each such Event of
Default is deemed to exist and continue so long as, but only as long as, it has
not been remedied or explicitly waived:
(a) Company fails to make any payment of principal amount
of, Make-Whole Amount, if any, Break Amount, if any, or interest on, any
Equipment Note within 15 days after such payment is due;
(b) Company fails to make payment when the same is due of
any amount (other than amounts referred to in Section 4.01(a)) due hereunder,
under any Equipment Note or under any other Operative Document, and such failure
continues unremedied for 30 days after the receipt by Company of written notice
thereof from Loan Trustee or any Noteholder;
(c) Company fails to carry and maintain insurance or
indemnity on or with respect to the Aircraft in accordance with the provisions
of Section 7.06; provided that no such failure to carry and maintain insurance
shall constitute an Event of Default until the earlier of (i) the date such
failure has continued unremedied for a period of 30 days after receipt by Loan
Trustee of the notice of cancellation or lapse referred to in Section 7.06 or
(ii) the date such insurance is not in effect as to Loan Trustee;
(d) Company fails to perform or observe any other
covenant, condition or agreement to be performed or observed by it under any
Operative Document, and such failure continues unremedied for a period of 60
days after receipt by Company of written notice thereof from Loan Trustee or any
Noteholder; provided that, if such failure is capable of being remedied, no such
failure shall constitute an Event of Default for a period of one year after such
notice is received by Company so long as Company is diligently proceeding to
remedy such failure;
(e) any representation or warranty made by Company in any
Operative Document was incorrect in any material respect at the time made, and
such incorrectness continues to be material to the transactions contemplated
hereby and continues unremedied for a period of 60 days after receipt by Company
of written notice thereof from Loan Trustee; provided that, if such
incorrectness is capable of being remedied, no such incorrectness shall
constitute an Event of Default for a period of one year after such notice is
received by Company so long as Company is diligently proceeding to remedy such
incorrectness;
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(f) Company consents to the appointment of or the taking
of possession by a receiver, trustee or liquidator in respect of a substantial
part of its property, admits in writing its inability to pay its debts generally
as they come due or makes a general assignment for the benefit of its creditors;
(g) Company files a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization, liquidation or other
relief as a debtor in a case under any bankruptcy laws or insolvency laws (as in
effect at such time) or an answer admitting the material allegations of a
petition filed against Company as a debtor in any such case, or Company as a
debtor seeks relief by voluntary petition, answer or consent, under the
provisions of any other bankruptcy or other similar law providing for the
reorganization or winding-up of corporations (as in effect at such time), or
Company seeks an agreement, composition, extension or adjustment with its
creditors under such laws;
(h) an order, judgment or decree is entered by any court
of competent jurisdiction appointing, without the consent of Company, a
receiver, trustee or liquidator of Company or sequestering any substantial part
of its property, or granting any other relief in respect of Company as a debtor
under any bankruptcy laws or insolvency laws (as in effect at such time), and
any such order, judgment or decree of appointment or sequestration remains in
force undismissed, unstayed or unvacated for a period of 90 days after the date
of entry thereof;
(i) a petition against Company as a debtor in a case
under the federal bankruptcy laws or other insolvency laws (as in effect at such
time) is filed and not withdrawn or dismissed within 90 days thereafter, or if,
under the provisions of any law providing for reorganization or winding-up of
corporations that may apply to Company, any court of competent jurisdiction
assumes jurisdiction, custody or control of Company or of any substantial part
of its property and such jurisdiction, custody or control remains in force
unrelinquished, unstayed or unterminated for a period of 90 days; or
(j) any amount in respect of the Equipment Notes or
Related Equipment Notes, including any payment of principal amount of,
Make-Whole Amount, if any, Break Amount, if any, or interest on, any Equipment
Note or any Related Equipment Note has not been paid in full on the Final
Payment Date;
provided, however, that notwithstanding anything to the contrary contained in
this Section 4.01, any failure of Company to perform or observe any covenant,
condition or agreement shall not constitute an Event of Default if such failure
arises by reason of an event referred to in the definition of "Event of Loss" so
long as Company is continuing to comply with all of the terms of Section 7.05.
Section 4.02 Remedies. (a) If an Event of Default has occurred
and is continuing and so long as the same shall continue unremedied, then and in
every such case Loan Trustee may, and upon the written instructions of a
Majority in Interest of Noteholders, Loan Trustee shall, do one or more of the
following to the extent permitted by, and subject to compliance with the
requirements of, applicable law then in effect (provided, however, that during
any period the Airframe or any Engine is subject to the CRAF Program and is in
possession of or being operated under the direction of the United States
government or an agency
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or instrumentality of the United States, Loan Trustee shall not, on account of
any Event of Default, be entitled to exercise or pursue any of the powers,
rights or remedies described in this Section 4.02 in such manner as to limit
Company's control under this Indenture (or any Permitted Lessee's control under
any Lease) of the Airframe or such Engine, unless at least 60 days' (or such
lesser period as may then be applicable under the Military Airlift Command
Program of the United States government) prior written notice of default
hereunder has been given by Loan Trustee by registered or certified mail to
Company (and any such Permitted Lessee) with a copy addressed to the Contracting
Office Representative or other appropriate person for the Military Airlift
Command of the United States Air Force under any contract with Company (or such
Permitted Lessee) relating to the Aircraft):
(i) declare by written notice to Company all the
Equipment Notes to be due and payable, whereupon the aggregate unpaid
principal amount of all Equipment Notes then outstanding, together with
accrued but unpaid interest thereon, Break Amount, if any, with respect
thereto, and other amounts due thereunder (but without Make-Whole
Amount), shall immediately become due and payable without presentment,
demand, protest or notice, all of which are hereby waived; provided
that if an Event of Default referred to in Subsections 4.01(f), (g),
(h) or (i) has occurred and is continuing, then and in every such case
the unpaid principal amount then outstanding, together with accrued but
unpaid interest, Break Amount, if any, with respect thereto, and all
other amounts due thereunder (but without Make-Whole Amount) shall
immediately and without further act become due and payable without
presentment, demand, protest or other notice, all of which are hereby
waived; and, following such declaration or deemed declaration:
(ii) (A) cause Company, upon the demand by notice of Loan
Trustee, at Company's expense, to deliver promptly, and Company shall
deliver promptly, all or such part of the Airframe or any Engine as
Loan Trustee so demands to Loan Trustee or its order, or, if Company
has failed to so deliver the Airframe or any Engine after such demand,
Loan Trustee, at its option, may enter upon the premises where all or
any part of the Airframe or any Engine are located and take immediate
possession of and remove the same together with any engine which is not
an Engine but which is installed on the Airframe, subject to all of the
rights of the owner, lessor, lienor or secured party of such engine;
provided that the Airframe with an engine (which is not an Engine)
installed thereon may be flown or returned only to a location within
the continental United States, and such engine shall be held for the
account of any such owner, lessor, lienor, secured party or, if such
engine is owned by Company, may at the option of Company with the
consent of Loan Trustee (which will not be unreasonably withheld) or at
the option of Loan Trustee with the consent of Company (which will not
be unreasonably withheld), be exchanged with Company for an Engine in
accordance with the provisions of Section 7.05(b); (B) sell all or any
part of the Airframe and any Engine at public or private sale, whether
or not Loan Trustee at the time has possession thereof, as Loan Trustee
may determine, or otherwise dispose of, hold, use, operate, lease to
others or keep idle all or any part of the Airframe or such Engine as
Loan Trustee, in its sole discretion, determines, all free and clear of
any rights or claims of Company, and the proceeds of such sale or
disposition shall be applied as set forth in Section 3.03; or (C)
exercise any other remedy of a secured party under the Uniform
Commercial Code of the State of New York (whether or not in effect in
the jurisdiction in which enforcement is sought).
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Upon every such taking of possession of Collateral under this
Section 4.02, Loan Trustee may, from time to time, at the expense of the
Collateral, make all such expenditures for maintenance, insurance, repairs,
alterations, additions and improvements to and of the Collateral as it deems
necessary to cause the Collateral to be in such condition as required by the
provisions of this Indenture. In each such case, Loan Trustee may maintain, use,
operate, store, insure, lease, control, manage or dispose of the Collateral and
may exercise all rights and powers of Company relating to the Collateral as Loan
Trustee reasonably deems best, including the right to enter into any and all
such agreements with respect to the maintenance, use, operation, storage,
insurance, leasing, control, management or disposition of the Collateral or any
part thereof as Loan Trustee may reasonably determine; and Loan Trustee shall be
entitled to collect and receive directly all tolls, rents, revenues, issues,
income, products and profits of the Collateral and every part thereof without
prejudice, however, to the rights of Loan Trustee under any provision of this
Indenture to collect and receive all cash held by, or required to be deposited
with Loan Trustee hereunder. Such tolls, rents, revenues, issues, income,
products and profits shall be applied to pay the expenses of the use, operation,
storage, insurance, leasing, control, management or disposition of the
Collateral, and of all maintenance, repairs, replacements, alterations,
additions and improvements, and to make all payments that Loan Trustee is
required or elects to make, if any, for Taxes, insurance or other proper charges
assessed against or otherwise imposed upon the Collateral or any part thereof,
and all other payments which Loan Trustee is required or expressly authorized to
make under any provision of this Indenture, as well as just and reasonable
compensation for the services of Loan Trustee, and shall otherwise be applied in
accordance with Article III. If an Event of Default has occurred and is
continuing and the Equipment Notes either have been accelerated pursuant to this
Section 4.02 or have become due at maturity and Loan Trustee is entitled to
exercise rights hereunder, at the request of Loan Trustee, Company shall
promptly execute and deliver to Loan Trustee such instruments of title and other
documents as Loan Trustee reasonably deems necessary or advisable to enable Loan
Trustee or an agent or representative designated by Loan Trustee, at such time
or times and place or places as Loan Trustee specifies, to obtain possession of
all or any part of the Collateral to which Loan Trustee at the time is entitled
hereunder. If Company for any reason fails to execute and deliver such
instruments and documents after such request by Loan Trustee, Loan Trustee may
obtain a judgment conferring on Loan Trustee the right to immediate possession
and requiring Company to execute and deliver such instruments and documents to
Loan Trustee, to the entry of which judgment Company hereby specifically
consents to the fullest extent it may lawfully do so. All actual and reasonable
expenses of obtaining such judgement or of pursuing, searching for and taking
such property shall, until paid, be secured by the Lien of this Indenture.
(b) Loan Trustee shall give Company at least 30 days'
prior written notice of any public sale or of the date on or after which any
private sale will be held, which notice Company hereby agrees to the extent
permitted by applicable law is reasonable notice. Any Noteholder or Noteholders
shall be entitled to bid for and become the purchaser of any Collateral offered
for sale pursuant to this Section 4.02 and to credit against the purchase price
bid at such sale by such Noteholders all or any part of the unpaid amounts owing
to such Noteholders under the Operative Documents and secured by the Lien of
this Indenture (but only to the extent that such purchase price would have been
paid to such Noteholders pursuant to Article III if such purchase price were
paid in cash and the foregoing provision of this Section 4.02(b) were not given
effect). Loan Trustee may exercise such right without possession or production
of the Equipment Notes or proof of ownership thereof, and as a representative of
Noteholders may
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exercise such right without notice to Noteholders as parties to any suit or
proceeding relating to the foreclosure of any Collateral. Company may also bid
for and become the purchaser of any Collateral offered for sale pursuant to this
Section 4.02.
(c) To the extent permitted by applicable law, while an
Event of Default has occurred and is continuing, Company irrevocably appoints
Loan Trustee the true and lawful attorney-in-fact of Company (which appointment
is coupled with an interest) in its name and stead and on its behalf, for the
purpose of effectuating any sale, assignment, transfer or delivery for the
enforcement of the Lien of this Indenture, whether pursuant to foreclosure or
power of sale, or otherwise, to execute and deliver all such bills of sale,
assignments and other instruments as may be necessary or appropriate, with full
power of substitution, Company hereby ratifying and confirming all that such
attorney or any substitute does by virtue hereof in accordance with applicable
law; provided that if so requested by Loan Trustee or any purchaser, Company
shall ratify and confirm any such sale, assignment or transfer of delivery, by
executing and delivering to Loan Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
(d) At any time after Loan Trustee has declared the
unpaid principal amount of all Equipment Notes then outstanding to be due and
payable and prior to the sale of any part of the Collateral pursuant to this
Article IV, a Majority in Interest of Noteholders, by written notice to Company
and Loan Trustee, may rescind and annul such declaration, whether made by Loan
Trustee on its own accord or as directed, and its consequences if: (i) there has
been paid to or deposited with Loan Trustee an amount sufficient to pay all
overdue installments of principal amount of, and interest on, the Equipment
Notes, and all other amounts owing under the Operative Documents, that have
become due otherwise than by such declaration of acceleration and (ii) all other
Events of Default, other than nonpayment of principal amount or interest on the
Equipment Notes that have become due solely because of such acceleration, have
been either cured or waived; provided, that no such recission or annulment shall
extend to or affect any subsequent default or Event of Default or impair any
right consequent thereon.
(e) Notwithstanding anything contained herein, so long as
Pass Through Trustee under any Pass Through Trust Agreement or Subordination
Agent on its behalf is a Noteholder, Loan Trustee will not be authorized or
empowered to acquire title to any Collateral or take any action with respect to
any Collateral so acquired by it if such acquisition or action would cause any
Pass Through Trust to fail to qualify as a "grantor trust" for federal income
tax purposes.
Section 4.03 Remedies Cumulative. To the extent permitted
under applicable law, each and every right, power and remedy specifically given
to Loan Trustee herein or otherwise in this Indenture shall be cumulative and
shall be in addition to every other right, power and remedy specifically given
herein or now or hereafter existing at law, in equity or by statute, and each
and every right, power and remedy whether specifically given herein or otherwise
existing may be exercised from time to time and as often and in such order as
may be deemed expedient by Loan Trustee, and the exercise or the beginning of
the exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by Loan Trustee in the
-27-
exercise of any right, remedy or power or in the pursuance of any remedy shall,
to the extent permitted by applicable law, impair any such right, power or
remedy or be construed to be a waiver of any default on the part of Company or
to be an acquiescence therein.
Section 4.04 Discontinuance of Proceedings. In case Loan
Trustee has instituted any proceedings to enforce any right, power or remedy
under this Indenture by foreclosure, entry or otherwise, and such proceedings
have been discontinued or abandoned for any reason or have been determined
adversely to Loan Trustee, then and in every such case Company and Loan Trustee
shall, subject to any determination in such proceedings, be restored to their
former positions and rights hereunder with respect to the Collateral, and all
rights, remedies and powers of Loan Trustee shall continue as if no such
proceedings had been undertaken (but otherwise without prejudice).
Section 4.05 Waiver of Past Defaults. Upon written instruction
from a Majority in Interest of Noteholders, Loan Trustee shall waive any past
default hereunder and its consequences, and upon any such waiver such default
shall cease to exist and any Event of Default arising therefrom shall be deemed
to have been cured for every purpose of the Operative Documents, but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon; provided, however, that in the absence of written
instructions from each of the affected Noteholders, Loan Trustee shall not waive
any default (i) in the payment of the principal amount, Make-Whole Amount, if
any, Break Amount, if any, or interest due under any Equipment Note then
outstanding (other than with the consent of the holder thereof), or (ii) in
respect of a covenant or provision hereof which, under Article IX, cannot be
modified or amended without the consent of each such affected Noteholder.
Section 4.06 Noteholders May Not Bring Suit Except Under
Certain Conditions. A Noteholder of any Series shall not have the right to
institute any suit, action or proceeding at law or in equity or otherwise with
respect to this Indenture for the appointment of a receiver or for the
enforcement of any other remedy under this Indenture, unless:
(1) such Noteholder previously shall have given written
notice to Loan Trustee of a continuing Event of Default;
(2) A Majority in Interest of Noteholders shall have
requested Loan Trustee in writing to institute such action, suit or
proceeding and shall have offered to Loan Trustee indemnity as provided
in Section 5.03;
(3) Loan Trustee shall have refused or neglected to
institute any such action, suit or proceeding for 60 days after receipt
of such notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request
shall have been given to Loan Trustee during such 60-day period by a
Majority in Interest of Noteholders.
Except to the extent provided in the Intercreditor Agreement
or in any Indenture Supplement, it is understood and intended that no one or
more of Noteholders of any Series shall have any right in any manner whatsoever
hereunder or under the Indenture Supplement or under the Equipment Notes of such
Series to (i) surrender, impair, waive, affect, disturb or prejudice
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any Collateral, or the Lien of the Indenture on any Collateral, or the rights of
Noteholders of such Series, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Noteholder of such Series or (iii)
enforce any right under this Indenture, except in the manner provided in this
Indenture and for the equal, ratable and common benefit of all Noteholders of
such Series subject to the provisions of this Indenture.
Section 4.07 Appointment of a Receiver. Loan Trustee shall, as
a matter of right, be entitled to the appointment of a receiver (who may be Loan
Trustee or any successor or nominee thereof) for all or any part of the
Collateral, whether such receivership be incidental to a proposed sale of the
Collateral or the taking of possession thereof or otherwise, and Company hereby
consents to the appointment of such a receiver and will not oppose any such
appointment. Any receiver appointed for all or any part of the Collateral shall
be entitled to exercise all the rights and powers of Loan Trustee with respect
to the Collateral.
Section 4.08 Rights of Noteholders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Noteholder to receive payment of principal of, and premium, if any, and interest
on an Equipment Note on or after the respective due dates expressed in such
Equipment Note, shall not be impaired or affected without the consent of such
Noteholder.
ARTICLE V
DUTIES OF LOAN TRUSTEE
Section 5.01 Notice of Event of Default. If Loan Trustee has
knowledge of an Event of Default or of a default arising from a failure by
Company to pay when due any payment of principal amount, interest on, Break
Amount, if any, or Make-Whole Amount, if any, due and payable under any
Equipment Note, Loan Trustee shall promptly give notice thereof to Company,
Policy Provider, the Primary Liquidity Provider and each Noteholder. Subject to
the terms of Sections 4.02, 4.05, 5.02 and 5.03, Loan Trustee shall take such
action, or refrain from taking such action, with respect to such default or
Event of Default (including with respect to the exercise of any rights or
remedies hereunder) as Loan Trustee is instructed in writing by a Majority in
Interest of Noteholders. Subject to the provisions of Section 5.03, if Loan
Trustee does not receive instructions as above provided within 20 Business Days
after giving notice of such default or Event of Default to Noteholders, Loan
Trustee may, subject to instructions thereafter received pursuant to the
preceding provisions of this Section 5.01, take such action, or refrain from
taking such action with respect to such default or Event of Default as it
reasonably determines to be advisable in the best interests of Noteholders, but
shall be under no duty to take or refrain from taking any action. It shall use
the same degree of care and skill in connection therewith as a prudent person
would use under the circumstances in the conduct of his or her own affairs. Loan
Trustee may not sell the Airframe or any Engine without the consent of a
Majority in Interest of Noteholders.
For all purposes of this Indenture, in the absence of actual
knowledge, Loan Trustee shall not be deemed to have knowledge of a default or an
Event of Default unless notified in writing by Company or one or more
Noteholders; and "actual knowledge" (as used in the foregoing clause) of Loan
Trustee shall mean actual knowledge of an officer in the Corporate
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Trust Division of Loan Trustee; provided, however, that Loan Trustee is deemed
to have actual knowledge of (i) the failure of Company to pay any principal
amount of, or interest on, the Equipment Notes directly to Loan Trustee when the
same shall become due or (ii) the failure of Company to maintain insurance as
required under Section 7.06 if Loan Trustee receives written notice thereof from
an insurer or insurance broker.
Section 5.02 Action upon Instructions; Certain Rights and
Limitations. Subject to the terms of Article IV and this Article V, upon the
written instructions at any time of a Majority in Interest of Noteholders, Loan
Trustee shall promptly (i) give such notice, direction, consent, waiver or
approval or exercise such right, remedy or power hereunder in respect of all or
any part of the Collateral or (ii) take such other action, as is specified in
such instructions.
Loan Trustee will cooperate with Company in connection with
the recording, filing, re-recording and refiling of the Indenture and any
supplements to it and any financing statements or other documents as is
necessary to maintain the perfection hereof or otherwise protect the security
interests created hereby. Loan Trustee shall furnish to Company upon request
such information and copies of such documents as Loan Trustee may have and as
are necessary for Company to perform its duties under Article II hereof.
Section 5.03 Indemnification. Loan Trustee shall not be
required to take any action or refrain from taking any action under Sections
5.01 (other than the first sentence thereof) or 5.02 or Article IV unless it
shall have received indemnification against any risks incurred in connection
therewith in form and substance reasonably satisfactory to it, including,
without limitation, adequate advances against costs that may be incurred by it
in connection therewith. Loan Trustee shall not be required to take any action
under Section 5.01 (other than the first sentence thereof) or 5.02 or Article
IV, nor shall any other provision of any Operative Document be deemed to impose
a duty on Loan Trustee to take any action, if Loan Trustee shall have been
advised by outside counsel that such action is contrary to the terms hereof or
is otherwise contrary to law.
Section 5.04 No Duties Except as Specified in Indenture or
Instructions. Loan Trustee shall not have any duty or obligation to manage,
control, lease, use, sell, operate, store, dispose of or otherwise deal with the
Aircraft or any other part of the Collateral, or to otherwise take or refrain
from taking any action under, or in connection with, this Indenture, except as
expressly provided by the terms of this Indenture or the Participation Agreement
or as expressly provided in written instructions received pursuant to the terms
of Section 5.01 or 5.02; and no implied duties or obligations shall be read into
this Indenture against Loan Trustee.
Section 5.05 No Action Except under Indenture or Instructions.
Loan Trustee will not manage, control, use, sell, lease, operate, store, dispose
of or otherwise deal with the Aircraft or any other part of the Collateral
except in accordance with the powers granted to, or the authority conferred
upon, Loan Trustee pursuant to this Indenture and in accordance with the express
terms hereof.
Section 5.06 Investment of Amounts Held by Loan Trustee. Any
monies (including for the purpose of this Section 5.06 any cash deposited with
Loan Trustee by Company, any cash received by Loan Trustee pursuant to Sections
7.05(c) or 7.06(d) or
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otherwise) or Permitted Investments purchased by the use of such cash pursuant
to this Section 5.06 or any cash constituting the proceeds of the maturity, sale
or other disposition of any Permitted Investments) held by Loan Trustee
hereunder as part of the Collateral, until paid out by Loan Trustee as herein
provided, (i) subject to clause (ii) below, may be carried by Loan Trustee on
deposit with itself or on deposit to its account with any bank, trust company or
national banking association incorporated or doing business under the laws of
the United States or one of the states thereof having combined capital and
surplus and retained earnings of a least $100,000,000, and Loan Trustee shall
not have any liability for interest upon any such monies except as otherwise
agreed in writing with Company, or (ii) at any time and from time to time, so
long as no Event of Default shall have occurred and be continuing, at the
request of Company, shall be invested and reinvested in Permitted Investments as
specified in such request (if such investments are reasonably available for
purchase) and sold, in any case at such prices, including accrued interest or
its equivalent, as are set forth in such request, and such Permitted Investments
shall be held by Loan Trustee in trust as part of the Collateral until so sold;
provided that Company shall upon demand pay to Loan Trustee the amount of any
loss realized upon maturity, sale or other disposition of any such Permitted
Investment and, so long as no Event of Default or Payment Default shall have
occurred and be continuing, Company shall be entitled to receive from Loan
Trustee, and Loan Trustee shall promptly pay to Company, any profit, income,
interest, dividend or gain realized upon maturity, sale or other disposition of
any Permitted Investment. If an Event of Default or Payment Default shall have
occurred and be continuing, any net income, profit, interest, dividend or gain
realized upon maturity, sale or other disposition of any Permitted Investment
shall be held as part of the Collateral and shall be applied by Loan Trustee at
the same time, on the same conditions and in the same manner as the amounts in
respect of which such income, profit, interest, dividend or gain was realized
are required to be distributed in accordance with the provisions hereof pursuant
to which such amounts were required to be held. Loan Trustee shall not be
responsible for any losses on any investments or sales of Permitted Investments
made pursuant to the procedure specified in this Section 5.06 other than by
reason of its willful misconduct or negligence. If any moneys or investments are
held by Loan Trustee solely because an Event of Default has occurred and is
continuing and such moneys or investments have been held for a period of 90
consecutive days during which such Event of Default is continuing without any
remedial action being taken by Loan Trustee (it being expressly understood that
such remedial action includes any declaration of acceleration of the Equipment
Notes) in respect of such Event of Default pursuant to Section 4.02 hereof, and
provided that there is no stay, moratorium or injunction in effect preventing
the taking of such action, then, notwithstanding any other provision of the
Operative Documents, all such moneys and investments held by Loan Trustee shall
be released to Company on such 90th day, or on the next Business Day after such
90th day.
ARTICLE VI
LOAN TRUSTEE
Section 6.01 Acceptance of Trusts and Duties. U.S. Bank
accepts the trusts and duties hereby created and applicable to it and agrees to
perform such duties, but only upon the terms of this Indenture and agrees to
receive, handle and disburse all monies received by it as Loan Trustee
constituting part of the Collateral in accordance with the terms hereof. U.S.
Bank
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shall have no liability hereunder except (a) for its own willful misconduct or
negligence, (b) as provided in the fourth sentence of Section 2.03 and the
penultimate sentence of Section 5.06, (c) for liabilities that may result from
the inaccuracy of any representation or warranty of U.S. Bank in the
Participation Agreement or expressly made hereunder and (d) as otherwise
expressly provided in the Operative Documents.
Section 6.02 Absence of Certain Duties. Except in accordance
with written instructions furnished pursuant to Sections 5.01, 5.02 or 6.06, and
except as provided in, and without limiting the generality of, Sections 5.02,
5.03 and 5.04, Loan Trustee shall have no duty (a) to see to any registration of
the Aircraft or any recording or filing of this Indenture or any other document,
or to see to the maintenance of any such registration, recording or filing, (b)
to see to any insurance on the Aircraft or to effect or maintain any such
insurance, whether or not Company is in default with respect thereto, (c) to
confirm, verify or inquire into the failure to receive any financial statements
of Company or (d) to inspect the Aircraft at any time or ascertain or inquire as
to the performance or observance of any of Company's covenants hereunder with
respect to the Aircraft.
Section 6.03 No Representations or Warranties as to the
Documents. Except as provided in Article 5 of the Participation Agreement, Loan
Trustee shall not be deemed to have made any representation or warranty as to
the validity, legality or enforceability of any Operative Document or any other
document or instrument, or as to the correctness of any statement (other than a
statement by Loan Trustee) contained herein or therein, except that Loan Trustee
hereby represents and warrants that each of said specified documents to which it
is a party has been or will be duly executed and delivered by one of its
officers who is and will be duly authorized to execute and deliver such document
on its behalf.
Section 6.04 No Segregation of Monies; No Interest. Subject to
Section 5.06 hereof, all moneys received by Loan Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law, and neither Loan Trustee nor any agent
of Loan Trustee shall be under any liability for interest on any moneys received
by it hereunder; provided, however, that any payments received, or applied
hereunder, by Loan Trustee shall be accounted for by Loan Trustee so that any
portion thereof paid or applied pursuant hereto shall be identifiable as to the
source thereof.
Section 6.05 Reliance; Agents; Advice of Counsel. Loan Trustee
shall not incur any liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper reasonably believed by it to be genuine
and reasonably believed by it to be signed by the proper party or parties. Loan
Trustee may accept a copy of a resolution of the Board of Directors of any party
to the Participation Agreement, certified by the Secretary or an Assistant
Secretary of such party as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted and that the same
is in full force and effect. As to any fact or matter the manner of
ascertainment of which is not specifically described herein, Loan Trustee may
for all purposes hereof rely on a certificate, signed by a duly authorized
officer of Company, as to such fact or matter, and such certificate shall
constitute full protection to Loan Trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon. In the administration of the
trusts
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hereunder, Loan Trustee may, (a) execute any of the trusts or powers hereof and
perform its powers and duties hereunder directly or through agents (including
paying agents or registrars) or attorneys, and (b) at the expense of the
Collateral, consult with counsel, accountants and other skilled Persons to be
selected and retained by it. Loan Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the advice or opinion
of any such counsel, accountants or other skilled Persons acting within such
counsel's, accountants' or Person's area of competence (so long as Loan Trustee
shall have exercised reasonable care and judgment in selecting such Persons).
Section 6.06 Instructions from Noteholders. In the
administration of the trusts created hereunder, Loan Trustee shall have the
right to seek instructions from a Majority in Interest of Noteholders should any
provision of this Indenture appear to conflict with any other provision herein
or any other Operative Document or Pass Through Document or should Loan
Trustee's duties or obligations hereunder be unclear, and Loan Trustee shall
incur no liability in refraining from acting until it receives such
instructions. Loan Trustee shall be fully protected for acting in accordance
with any instructions received under this Section 6.06.
ARTICLE VII
OPERATING COVENANTS OF COMPANY
Section 7.01 Liens. Company will not directly or indirectly
create, incur, assume or suffer to exist any Lien on or with respect to the
Aircraft, its title thereto or any of its interest therein, except:
(a) the rights of Loan Trustee as provided in the
Operative Documents, the Lien of this Indenture, the rights of any Permitted
Lessee under a Lease permitted hereunder;
(b) the rights of others under agreements or arrangements
to the extent expressly permitted by this Indenture;
(c) Loan Trustee Liens, Noteholder Liens and Other Party
Liens;
(d) Liens for Taxes either not yet due or payable or
being contested in good faith by appropriate proceedings so long as such
proceedings do not involve any material risk of the sale, forfeiture or loss of
the Airframe or any Engine or Loan Trustee's interest therein or impair the Lien
of this Indenture;
(e) materialmen's, mechanics', workers', repairmen's,
employees' or other like Liens arising in the ordinary course of business
(including those arising under maintenance agreements entered into in the
ordinary course of business) securing obligations that either are not yet
overdue for a period of more than 60 days or are being contested in good faith
by appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Airframe or any Engine or
Loan Trustee's interest therein or impair the Lien of this Indenture;
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(f) Liens arising out of any judgment or award, so long
as such judgment is, within 60 days after the entry thereof, discharged, vacated
or reversed, or execution thereof stayed pending appeal or other judicial review
or is discharged, vacated or reversed within 60 days after the expiration of
such stay;
(g) any other Lien with respect to which Company provides
a bond, cash collateral or other security adequate in the reasonable opinion of
Loan Trustee;
(h) salvage or similar rights of insurers under insurance
policies maintained by Company; and
(i) Liens approved in writing by Loan Trustee with the
consent of a Majority in Interest of Noteholders.
Liens described in clauses (a) through (i) above are referred to herein as
"Permitted Liens". Company shall promptly, at its own expense, take (or cause to
be taken) such action as may be necessary duly to discharge (by bonding or
otherwise) any Lien other than a Permitted Lien arising at any time with respect
to the Aircraft, its title thereto or any of its interest therein.
Section 7.02 Possession, Operation and Use, Maintenance and
Registration. (a) Possession. Without the prior written consent of Loan Trustee,
Company shall not lease or otherwise in any manner deliver, transfer or
relinquish possession of the Airframe or any Engine or install any Engine, or
permit any Engine to be installed, on any airframe other than the Airframe;
provided that Company (or, except with respect to clauses (viii) and (ix) below,
any Permitted Lessee) may without the prior written consent of Loan Trustee:
(i) subject the Airframe to interchange agreements or
subject any Engine to interchange or pooling agreements or
arrangements, in each case entered into by Company (or any Permitted
Lessee) in the ordinary course of its business; provided that (A) no
such agreement or arrangement contemplates or requires the transfer of
title to the Airframe and (B) if Company's title to any such Engine is
divested under any such agreement or arrangement, such divestiture
shall be deemed to be an Event of Loss with respect to such Engine, and
Company shall (or shall cause any Permitted Lessee to) comply with
Section 7.05(b) in respect thereof;
(ii) deliver possession of the Airframe or any Engine to
any Person for testing, service, repair, restoration, storage,
maintenance or other similar purposes or for alterations, modifications
or additions to the Airframe or such Engine to the extent required or
permitted by the terms hereof;
(iii) transfer or permit the transfer of possession of the
Airframe or any Engine to any Government pursuant to a lease, contract
or other instrument;
(iv) subject (or permit any Permitted Lessee to subject)
the Airframe or any Engine to the CRAF Program or transfer (or permit
any Permitted Lessee to transfer) possession of the Airframe or any
Engine to the United States government in accordance with applicable
laws, rulings, regulations or orders (including, without limitation,
any transfer of possession pursuant to the CRAF Program); provided,
that Company (or any
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Permitted Lessee) (A) shall promptly notify Loan Trustee upon
transferring possession of the Airframe or any Engine pursuant to this
clause (iv) and (B) in the case of a transfer of possession pursuant to
the CRAF Program, shall notify Loan Trustee of the name and address of
the responsible Contracting Office Representative for the Military
Airlift Command of the United States Air Force or other appropriate
Person to whom notices must be given and to whom requests or claims
must be made to the extent applicable under the CRAF Program;
(v) install an Engine on an airframe owned by Company (or
any Permitted Lessee) free and clear of all Liens, except (A) Permitted
Liens and Liens that apply only to the engines (other than Engines),
appliances, parts, instruments, appurtenances, accessories, furnishings
and other equipment (other than Parts) installed on such airframe (but
not to the airframe as an entirety) and (B) the rights of third parties
under interchange agreements or pooling or similar arrangements that
would be permitted under clause (i) above;
(vi) install an Engine on an airframe leased to Company
(or any Permitted Lessee) or purchased or owned by Company (or any
Permitted Lessee) subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of all
Liens except (1) the rights of the parties to the lease or conditional
sale or other security agreement covering such airframe, or their
successors and assigns, and (2) Liens of the type permitted by clause
(v) of this Section 7.02(a); and (B) either: (1) Company has obtained
from the lessor or secured party of such airframe a written agreement
(which may be the lease, conditional sale or other security agreement
covering such airframe), in form and substance satisfactory to Loan
Trustee (an agreement from such lessor or secured party substantially
in the form of the penultimate paragraph of this Section 7.02(a) being
deemed to be satisfactory to Loan Trustee), whereby such lessor or
secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any
Engine by reason of such Engine being installed on such airframe at any
time while such Engine is subject to the Lien of this Indenture, or (2)
such lease, conditional sale or other security agreement provides that
such Engine shall not become subject to the Lien of such lease,
conditional sale or other security agreement at any time while such
Engine is subject to the Lien of this Indenture, notwithstanding its
installation on such airframe;
(vii) install an Engine on an airframe owned by Company (or
any Permitted Lessee), leased to Company (or any Permitted Lessee) or
purchased by Company (or any Permitted Lessee) subject to a conditional
sale or other security agreement under circumstances where neither
clause (v) nor clause (vi) of this Section 7.02(a) is applicable;
provided that such installation shall be deemed an Event of Loss with
respect to such Engine, and Company shall comply with Section 7.05(b)
in respect thereof, if such installation adversely affects Loan
Trustee's security interest in such Engine, Loan Trustee not intending
hereby to waive any right or interest it may have to or in such Engine
under applicable law until compliance by Company with Section 7.05(b);
(viii) lease any Engine or the Airframe and Engines to any
United States air carrier as to which there is in force a certificate
issued pursuant to the Transportation
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Code (49 U.S.C. Sections 41101-41112) or successor provision that gives
like authority; provided that no Event of Default exists at the time
such lease is entered into; and
(ix) lease any Engine or the Airframe and Engines to (A)
any foreign air carrier other than those set forth in clause (B), (B)
any foreign air carrier that is at the inception of the lease based in
and a domiciliary of a country listed in Exhibit B hereto, (C) the
manufacturer of the Airframe or any Engine (either directly or through
an affiliate) and (D) any foreign air carrier consented to in writing
by Loan Trustee with the consent of a Majority in Interest of
Noteholders; provided that (v) no Event of Default exists at the time
such lease is entered into, (w) in the case of a lease to a foreign air
carrier under clause (A) above, Loan Trustee receives at the time of
such lease (1) written confirmation from each of the Rating Agencies
that such lease would not result in a reduction of the rating for any
class of Pass Through Certificates below the then current rating for
such class of Pass Through Certificates or a withdrawal or suspension
of the rating of any class of Pass Through Certificates, without regard
to the Policy (as defined in the Policy Provider Agreement) and (2) an
opinion of counsel to Company (such counsel to be reasonably
satisfactory to Loan Trustee) to the effect that there exist no
possessory rights in favor of the lessee under the laws of such
lessee's country which would, upon bankruptcy or insolvency of or other
default by Company and assuming at such time such lessee is not
insolvent or bankrupt, prevent the taking of possession of any such
Engine or the Airframe and any such Engine by Loan Trustee in
accordance with and when permitted by the terms of Section 4.02 upon
the exercise by Loan Trustee of its remedies under Section 4.02, (x) in
the case of a lease to any foreign air carrier (other than a foreign
air carrier principally based in Taiwan), the United States maintains
normal diplomatic relations with the country in which such foreign air
carrier is based at the time such lease is entered into and in the case
of a lease to a foreign air carrier principally based in Taiwan, the
United States maintains diplomatic relations with Taiwan at least as
good as those on the Closing Date, (y) in the case of a lease to any
foreign air carrier, Company furnishes Loan Trustee with a certificate
from a Responsible Officer of Company certifying that there exist no
possessory rights in favor of such lessee under the laws of such
lessee's country which would, upon bankruptcy or insolvency of or other
default by Company, and assuming at such time such lessee is not
insolvent or bankrupt, prevent the taking of possession of any such
Engine or the Airframe and any such Engine by Loan Trustee in
accordance with and when permitted by the terms of Section 4.02 upon
the exercise by Loan Trustee of its remedies under Section 4.02, and
(z) in the case of any lease to a foreign air carrier, such carrier is
not then subject to any bankruptcy, insolvency, liquidation,
reorganization, dissolution or similar proceeding and shall not have
substantially all of its property in the possession of any liquidator,
trustee, receiver or similar person;
provided that the rights of any lessee or other transferee who receives
possession of the Aircraft, the Airframe or any Engine by reason of a transfer
permitted by this Section 7.02(a) (other than the transfer of an Engine which is
deemed an Event of Loss) shall be subject and subordinate to, and any permitted
lease shall be made expressly subject and subordinate to, all the terms of this
Indenture, including Loan Trustee's rights to repossess pursuant to Section 4.02
and to avoid such lease upon such repossession, and Company shall remain
primarily liable hereunder for the performance and observance of all of the
terms and conditions of this Indenture to the same
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extent as if such lease or transfer had not occurred, any such lease shall
include appropriate provisions for the maintenance and insurance of the
Aircraft, the Airframe or such Engine, and no lease or transfer of possession
otherwise in compliance with this Section shall (x) result in any registration
or re-registration of the Aircraft except to the extent permitted in Section
7.02(e) or the maintenance, operation or use thereof that does not comply with
Section 7.02(b) and (c) or (y) permit any action not permitted to be taken by
Company with respect to the Aircraft hereunder. Company shall promptly notify
Loan Trustee and the Rating Agencies of the existence of any such lease with a
term in excess of one year.
Loan Trustee, each Noteholder by acceptance of an Equipment
Note, and each Related Noteholder by acceptance of a Related Equipment Note
agrees, for the benefit of Company (and any Permitted Lessee) and for the
benefit of the lessor or secured party of any airframe or engine leased to
Company (or any Permitted Lessee) or purchased or owned by Company (or any
Permitted Lessee) subject to a conditional sale or other security agreement,
that Loan Trustee, Noteholders and Related Noteholders will not acquire or
claim, as against Company (or any Permitted Lessee) or such lessor or secured
party, any right, title or interest in: (A) any engine or engines owned by
Company (or any Permitted Lessee) or by the lessor under such lease or subject
to a security interest in favor of the secured party under such conditional sale
or other security agreement as the result of such engine or engines being
installed on the Airframe, or (B) any airframe owned by Company (or any
Permitted Lessee) or by the lessor under such lease or subject to a security
interest in favor of the secured party under such conditional sale or other
security agreement as the result of any Engine being installed on such airframe.
Loan Trustee acknowledges that any "wet lease" or other
similar arrangement under which Company (or any Permitted Lessee) maintains
operational control of the Aircraft does not constitute a delivery, transfer or
relinquishment of possession for purposes of this Section 7.02(a).
(b) Operation and Use. Company agrees that the Aircraft
will not be maintained, used or operated in violation of any law, rule or
regulation of any government of any country having jurisdiction over the
Aircraft or in violation of any airworthiness certificate, license or
registration relating to the Aircraft issued by any such government, except to
the extent Company (or, if a Lease is then in effect, any Permitted Lessee) is
contesting in good faith the validity or application of any such law, rule or
regulation in any manner that does not involve any material risk of sale,
forfeiture or loss of the Aircraft or impair the Lien of this Indenture;
provided, that Company shall not be in default under, or required to take any
action set forth in, this sentence if it is not possible for it to comply with
the laws of a jurisdiction other than the United States (or other than any
jurisdiction in which the Aircraft is then registered) because of a conflict
with the applicable laws of the United States (or such jurisdiction in which the
Aircraft is then registered). Company will not operate the Aircraft, or permit
the Aircraft to be operated or located, (i) in any area excluded from coverage
by any insurance required by the terms of Section 7.06 or (ii) in any war zone
or recognized or, in Company's judgment, threatened areas of hostilities unless
covered by war risk insurance in accordance with Section 7.06, unless in the
case of either clause (i) or (ii), (x) government indemnification complying with
Section 7.06 (a) and (b) has been provided or (y) the Aircraft is only
temporarily located in such area as a result of an isolated occurrence or
isolated series of occurrences attributable to a hijacking, medical
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emergency, equipment malfunction, weather conditions, navigational error or
other similar unforeseen circumstances and Company is using its good faith
efforts to remove the Aircraft from such area as promptly as practicable.
(c) Maintenance. Company shall maintain, service, repair
and overhaul the Aircraft (or cause the same to be done) (i) so as to keep the
Aircraft in good operating condition and in such condition as may be necessary
to enable the airworthiness certification of the Aircraft to be maintained in
good standing at all times (other than during temporary periods of storage,
during maintenance, testing or modification permitted hereunder, or during
periods of grounding by applicable governmental authorities) under the
Transportation Code, during such periods in which the Aircraft is registered
under the laws of the United States, or, if the Aircraft is registered under the
laws of any other jurisdiction, the applicable laws of such jurisdiction and
(ii) using the same standards as Company (or a Permitted Lessee, if a Lease is
in effect) uses with respect to similar aircraft operated by Company (or such
Permitted Lessee) in similar circumstances (it being understood that the
obligations pursuant to this clause (ii) do not limit Company's obligations
under the preceding clause (i)). In any case, the Aircraft will be maintained in
accordance with the maintenance standards required by the FAA (while operated
under an FAA-approved maintenance program) or, while operated under the
maintenance program of another jurisdiction, standards substantially equivalent
to those required by the central aviation authority of Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland or the United
Kingdom. Company shall maintain or cause to be maintained all records, logs and
other documents required to be maintained in respect of the Aircraft by
appropriate authorities in the jurisdiction in which the Aircraft is registered.
(d) Identification of Loan Trustee's Interest. Company
agrees to affix as promptly as practicable after the Closing Date and thereafter
to maintain in the cockpit of the Aircraft, in a clearly visible location, and
(if not prevented by applicable law or regulations or by any government) on each
Engine, a nameplate bearing the inscription "MORTGAGED TO U.S. BANK TRUST
NATIONAL ASSOCIATION, AS LOAN TRUSTEE" (such nameplate to be replaced, if
necessary, with a nameplate reflecting the name of any successor Loan Trustee).
(e) Registration. Company shall cause the Aircraft to
remain duly registered, under the laws of the United States, in the name of
Company except as otherwise required by the Transportation Code; provided that
Loan Trustee shall, at Company's expense, execute and deliver all such documents
as Company may reasonably request for the purpose of continuing such
registration. Notwithstanding the preceding sentence, Company, at its own
expense, may cause or allow the Aircraft to be duly registered under the laws of
any foreign jurisdiction in which a Permitted Lessee could be principally based,
in the name of Company or of any nominee of Company, or, if required by
applicable law, in the name of any other Person (and, following any such foreign
registration, may cause the Aircraft to be re-registered under the laws of the
United States); provided, that in the case of jurisdictions other than those
approved by Loan Trustee with the consent of a Majority in Interest of
Noteholders (i) if such jurisdiction is at the time of registration listed on
Exhibit B, Loan Trustee and Policy Provider shall have received at the time of
such registration an opinion of counsel to Company reasonably satisfactory to
Loan Trustee to the effect that (A) this Indenture and Loan Trustee's right to
repossession thereunder is valid and enforceable under the laws of such country,
(B) after giving effect to such change in
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registration, the Lien of this Indenture shall continue as a valid first
priority Lien and shall be duly perfected in the new jurisdiction of
registration and that all filing, recording or other action necessary to perfect
and protect the Lien of this Indenture has been accomplished (or if such opinion
cannot be given at such time, (x) the opinion shall detail what filing,
recording or other action is necessary and (y) Loan Trustee and Policy Provider
shall have received a certificate from a Responsible Officer of Company that all
possible preparations to accomplish such filing, recording and other action
shall have been done, and such filing, recording and other action shall be
accomplished and a supplemental opinion to that effect shall be promptly
delivered to Loan Trustee subsequent to the effective date of such change in
registration), (C) the obligations of Company under this Indenture shall remain
valid, binding and (subject to customary bankruptcy and equitable remedies
exceptions and to other exceptions customary in foreign opinions generally)
enforceable under the laws of such jurisdiction (or the laws of the jurisdiction
to which the laws of such jurisdiction would refer as the applicable governing
law), (D) all approvals or consents of any government in such jurisdiction
having jurisdiction required for such change in registration shall have been
duly obtained and shall be in full force and effect and (E) (unless Company
shall have agreed to provide insurance covering the risk of requisition of use
or title of the Aircraft by the government of such jurisdiction so long as the
Aircraft is registered under the laws of such jurisdiction) the laws of such
jurisdiction require fair compensation by the government of such jurisdiction
payable in currency freely convertible into Dollars for the loss of use or title
of the Aircraft in the event of requisition by such government of such use or
title, and (ii) if such jurisdiction is at the time of registration not listed
on Exhibit B, Loan Trustee shall have received (in addition to the opinions set
forth in clause (i) above) at the time of such registration an opinion of
counsel to Company reasonably satisfactory to Loan Trustee to the effect that
(A) the terms of this Indenture are legal, valid, binding and enforceable in
such jurisdiction (subject to exceptions customary in such jurisdiction,
provided, that, subject to exceptions relating to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and exceptions relating to general principles of equity, such counsel
shall opine that any applicable laws limiting the remedies provided in Section
4.02 do not in the opinion of such counsel make the remedies provided in Section
4.02 inadequate for the practical realization of the rights and benefits
provided thereby), (B) it is not necessary for Loan Trustee to register or
qualify to do business in such jurisdiction and (C) there is no tort liability
of the lender of an aircraft not in possession thereof under the laws of such
jurisdiction other than tort liability that might have been imposed on such
lender under the laws of the United States or any state thereof (it being
understood that such opinion shall be waived if insurance reasonably
satisfactory to Loan Trustee is provided, at Company's expense, to cover such
risk). Loan Trustee will cooperate with Company in effecting such foreign
registration. Notwithstanding the foregoing, prior to any such change in the
country of registry of the Aircraft, the following conditions shall be met (or
waived as provided in Section 6.01(b) of the Participation Agreement):
(i) no Event of Default shall have occurred and be
continuing at the effective date of the change in registration;
provided, that it shall not be necessary to comply with this condition
if the change in registration results in the registration of the
Aircraft under the laws of the United States or if a Majority in
Interest of Noteholders consents to such change in registration;
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(ii) Loan Trustee shall have received evidence of
compliance with the insurance provisions contained herein after giving
effect to such change in registration;
(iii) other than in the case of a change in registration to
Taiwan, the proposed change in registration is made to a country with
which the United States then maintains normal diplomatic relations, and
in the case of a change in registration to Taiwan, the United States
maintains diplomatic relations with Taiwan at least as good as those on
the Closing Date;
(iv) the indemnities in favor of each Person named as an
indemnitee under any other Operative Document afford each such Person
substantially the same protection as provided prior to such change of
registration (or Company shall have agreed upon additional indemnities
that, together with such original indemnities, to the reasonable
satisfaction of Loan Trustee, afford such protection); and
(v) Company shall have paid or made provision reasonably
satisfactory to Loan Trustee for the payment of all reasonable expenses
(including reasonable attorneys' fees) of Loan Trustee and Noteholders
in connection with such change in registration.
Section 7.03 Inspection; Financial Information. (a)
Inspection. At all reasonable times, but upon at least 15 Business Days' prior
written notice to Company, Policy Provider or Loan Trustee or their respective
authorized representatives may, subject to the other conditions of this Section
7.03(a), inspect the Aircraft and may inspect the books and records of Company
relating to the maintenance of the Aircraft required to be maintained by the FAA
or the government of another jurisdiction in which the Aircraft is then
registered; provided, that (i) Policy Provider or Loan Trustee or their
respective representatives, as the case may be, shall be fully insured at no
cost to Company in a manner satisfactory to Company with respect to any risks
incurred in connection with any such inspection or shall provide to Company a
written release satisfactory to Company with respect to such risks, (ii) any
such inspection shall be during Company's normal business hours and subject to
the safety, security and workplace rules applicable at the location where such
inspection is conducted and any applicable governmental rules or regulations,
(iii) any such inspection of the Aircraft shall be a visual, walk-around
inspection of the interior and exterior of the Aircraft and shall not include
opening any panels, bays or the like without Company's express consent, which
consent Company may in its sole discretion withhold, and (iv) no exercise of
such inspection right shall interfere with the use, operation or maintenance of
the Aircraft by, or the business of, Company and Company shall not be required
to undertake or incur any additional liabilities in connection therewith. All
information obtained in connection with any such inspection of the Aircraft and
of such books and records shall be Confidential Information and shall be treated
by Policy Provider and Loan Trustee and their respective representatives in
accordance with the provisions of Section 10.16. Any inspection pursuant to this
Section 7.03(a) shall be at the sole risk (including, without limitation, any
risk of personal injury or death) and expense of Policy Provider or Loan Trustee
(or their respective representatives) making such inspection. Except during the
continuance of an Event of Default, all inspections by Policy Provider and Loan
Trustee and their respective representatives provided for under this Section
7.03(a) shall be limited to one inspection of any kind contemplated by this
Section 7.03(a) during any consecutive twelve month period.
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(b) Financial Information. So long as any of the Secured
Obligations remain unpaid, Company agrees to furnish to Loan Trustee and Policy
Provider: (i) within 60 days after the end of each of the first three quarterly
periods in each fiscal year of Company, either (x) a consolidated balance sheet
of Company and its consolidated subsidiaries prepared by it as of the close of
such period, together with the related consolidated statements of income for
such period or (y) a report of Company on Form 10-Q in respect of such period in
the form filed with the Securities and Exchange Commission and (ii) within 120
days after the close of each fiscal year of Company, either (x) a consolidated
balance sheet of Company and its consolidated subsidiaries as of the close of
such fiscal year, together with the related consolidated statements of income
for such fiscal year, certified by independent public accountants, or (y) a
report of Company on Form 10-K in respect of such year in the form filed with
the Securities and Exchange Commission. Company may fulfill the requirements of
this Section 7.03(b) by providing the material described above in an electronic
format by electronic mail or accessible over the Internet.
Section 7.04 Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution of Engines. (a) Replacement of Parts.
Company shall promptly replace or cause to be replaced all Parts incorporated or
installed in or attached to the Airframe or any Engine and that become worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered
permanently unfit for use for any reason, except as otherwise provided in
Section 7.04(c) or if the Airframe or an Engine to which a Part relates has
suffered an Event of Loss. In addition, Company (or any Permitted Lessee) may
remove in the ordinary course of maintenance, service, repair, overhaul or
testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or rendered permanently unfit for use;
provided that Company (or any Permitted Lessee), except as otherwise provided in
Section 7.04(c), will replace such Parts as promptly as practicable. All
replacement Parts shall be free and clear of all Liens (except for Permitted
Liens and except in the case of replacement property temporarily installed on an
emergency basis) and shall be in the condition and repair required to be
maintained by the terms hereof. Except as otherwise provided in Section 7.04(c),
any Parts removed from the Airframe or any Engine shall remain subject to the
Lien of this Indenture no matter where located until it is replaced by a part
incorporated or installed in or attached to the Airframe or such Engine that
meets the requirements for replacement Parts specified above. Immediately upon
any replacement Part becoming incorporated or installed in or attached to the
Airframe or any Engine as above provided (except in the case of replacement
property temporarily installed on an emergency basis), without further act, (i)
the replaced Part shall thereupon be free and clear of all rights of Loan
Trustee and of the Lien of this Indenture and shall no longer be deemed a Part
hereunder, and (ii) such replacement Part shall become subject to the Lien of
this Indenture and be deemed a Part of the Airframe or such Engine for all
purposes to the same extent as the Parts originally incorporated or installed in
or attached to the Airframe or such Engine. Upon request of Company from time to
time, Loan Trustee shall execute and deliver to Company an appropriate
instrument confirming the release of any such replaced Part from the Lien of
this Indenture.
(b) Pooling of Parts. Any Part removed from the Airframe
or any Engine as provided in Section 7.04(a) may be subjected by Company or a
Person permitted to be in possession of the Aircraft to a pooling arrangement
entered into in the ordinary course of Company's or such Person's business;
provided that the part replacing such removed Part shall
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be incorporated or installed in or attached to the Airframe or such Engine in
accordance with Section 7.04(a) as promptly as practicable after the removal of
such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine may be owned by any third
party subject to such a pooling arrangement; provided that Company, at its
expense, as promptly thereafter as practicable either (i) causes title to such
replacement Part to vest in Company free and clear of all Liens (except
Permitted Liens), or (ii) replaces such replacement Part by incorporating or
installing in or attaching to the Airframe or such Engine a further replacement
Part in the manner contemplated by Section 7.04(a).
(c) Alterations, Modifications and Additions. Company
will make (or cause to be made) such alterations and modifications in and
additions to the Airframe and the Engines as are required from time to time to
meet the applicable requirements of the FAA or any applicable government of any
other jurisdiction in which the Aircraft is then registered; provided, however,
that Company (or, if a Lease is then in effect, any Permitted Lessee) may, in
good faith, contest the validity or application of any such requirement in any
manner that does not involve any material risk of sale, loss or forfeiture of
the Aircraft and does not adversely affect Loan Trustee's interest in the
Collateral. In addition, Company (or any Permitted Lessee), at its own expense,
may from time to time add further parts or accessories and make or cause to be
made such alterations and modifications in and additions to the Airframe or any
Engine as Company (or any Permitted Lessee) deems desirable in the proper
conduct of its business, including, without limitation, removal (without
replacement) of Parts, provided that no such alteration, modification or
addition shall materially diminish the value or utility of the Airframe or such
Engine below its value or utility immediately prior to such alteration,
modification or addition, assuming that the Airframe or such Engine was then in
the condition required to be maintained by the terms of this Indenture, except
that the value (but not the utility) of the Airframe or any Engine may be
reduced by the value of any such Parts that are removed that Company deems
obsolete or no longer suitable or appropriate for use on the Airframe or any
Engine. All Parts incorporated or installed in or attached or added to the
Airframe or any Engine as the result of such alteration, modification or
addition shall, without further act, be subject to the Lien of this Indenture.
Notwithstanding the foregoing, Company (or any Permitted Lessee) may, at any
time, remove any Part from the Airframe or any Engine if such Part: (i) is in
addition to, and not in replacement of or substitution for, any Part originally
incorporated or installed in or attached to the Airframe or such Engine at the
time of delivery thereof to Company or any Part in replacement of, or
substitution for, any such Part, (ii) is not required to be incorporated or
installed in or attached or added to the Airframe or such Engine pursuant to the
first sentence of this Section 7.04(c) and (iii) can be removed from the
Airframe or such Engine without materially diminishing the value or utility
required to be maintained by the terms of this Indenture that the Airframe or
such Engine would have had at such time had such removal not occurred. Upon the
removal by Company (or any Permitted Lessee) of any Part as permitted by this
Section 7.04(c), such removed Part shall, without further act, be free and clear
of all rights and interests of Loan Trustee and the Lien of this Indenture and
shall no longer be deemed a Part hereunder. Upon request of Company from time to
time, Loan Trustee shall execute and deliver to Company an appropriate
instrument confirming the release of any such removed Part from the Lien of this
Indenture.
(d) Substitution of Engines. Company shall have the right
at its option at any time, on at least 30 days' prior written notice to Loan
Trustee, to substitute a Replacement
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Engine for any Engine. In such event, and prior to the date of such
substitution, Company shall replace such Engine by complying with the terms of
Section 7.05(b) to the same extent as if an Event of Loss had occurred with
respect to such Engine.
Section 7.05 Loss, Destruction or Requisition. (a) Event of
Loss with Respect to the Airframe. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines then installed thereon,
Company shall as soon as practicable (and, in any event, within 30 days after an
Event of Loss has occurred) notify Loan Trustee of such Event of Loss, and,
within 90 days after such Event of Loss, Company shall give Loan Trustee written
notice of its election to perform one of the following options (it being agreed
that if Company has not given such notice of election within such 90-day period,
Company shall be deemed to have elected to perform the option set forth in the
following clause (ii)). Company may elect either to:
(i) substitute, on or before the Loss Payment Date (as
defined below), as replacement for the Airframe or Airframe and Engines
with respect to which an Event of Loss has occurred, a Replacement
Airframe (together with a number of Replacement Engines equal to the
number of Engines, if any, with respect to which the Event of Loss
occurred), such Replacement Airframe and Replacement Engines to be
owned by Company free and clear of all Liens (other than Permitted
Liens); provided that if Company has not performed such obligation on
or prior to the Loss Payment Date, then Company shall on the Loss
Payment Date prepay the Equipment Notes in full in accordance with
Section 2.10; or
(ii) redeem, on or before the Loss Payment Date, the
Equipment Notes in full in accordance with Section 2.10. Company shall
give Loan Trustee 20 days prior written notice if it elects to redeem
the Equipment Notes on any day prior to the Loss Payment Date.
The "Loss Payment Date" with respect to an Event of Loss means
the Business Day next succeeding the 120th day following the date of occurrence
of such Event of Loss.
If Company elects to substitute a Replacement Airframe (or a
Replacement Airframe and one or more Replacement Engines, as the case may be)
Company shall, at its sole expense, not later than the Loss Payment Date, (A)
cause an Indenture Supplement for such Replacement Airframe and Replacement
Engines, if any, to be delivered to Loan Trustee for execution and, upon such
execution, to be filed for recordation pursuant to the Transportation Code or
the applicable laws of such other jurisdiction in which the Aircraft is then
registered, (B) cause a financing statement or statements with respect to the
Replacement Airframe and Replacement Engines, if any, or other requisite
documents or instruments to be filed in such place or places as necessary in
order to perfect Loan Trustee's interest therein in the United States, or in any
other jurisdiction in which the Aircraft is then registered, (C) furnish Loan
Trustee with an opinion of Company's counsel (which may be internal counsel of
Company) addressed to Loan Trustee to the effect that upon such replacement,
such Replacement Airframe and Replacement Engines, if any, will be subject to
the Lien of this Indenture and addressing the matters set forth in clauses (A)
and (B), (D) furnish Loan Trustee with a certificate of an independent aircraft
engineer or appraiser, certifying to the reasonable satisfaction of Loan
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Trustee that the Replacement Airframe and Replacement Engines, if any, have a
value and utility (without regard to hours or cycles) at least equal to the
Airframe and Engines, if any, so replaced, assuming the Airframe and such
Engines were in the condition and repair required by the terms hereof
immediately prior to the occurrence of such Event of Loss and that such
Replacement Airframe shall have been delivered from the Manufacturer no earlier
than one year prior to the date that the Airframe being replaced was delivered
from the Manufacturer, (E) furnish Loan Trustee with evidence of compliance with
the insurance provisions of Section 7.06 with respect to such Replacement
Airframe and Replacement Engines, if any, (F) furnish Loan Trustee with a copy
of the original xxxx of sale respecting such Replacement Airframe and a copy of
the original xxxx of sale or, if the xxxx of sale is unavailable, other evidence
of ownership reasonably satisfactory to Loan Trustee (which may be a copy of an
invoice or purchase order) respecting such Replacement Engines, if any, and (G)
furnish Loan Trustee with an opinion of Company's counsel (which may be internal
counsel of Company) reasonably satisfactory to Loan Trustee to the effect that
Loan Trustee will be entitled to the benefits of Section 1110 with respect to
the Replacement Airframe, provided that (i) such opinion need not be delivered
to the extent that the benefits of Section 1110 were not, by reason of a change
in law or governmental or judicial interpretation thereof, available to Loan
Trustee with respect to the Aircraft immediately prior to such substitution and
(ii) such opinion may contain qualifications and assumptions of the tenor
contained in the Section 1110 opinion of Company's special counsel delivered
pursuant to Section 3.01 of the Participation Agreement on the Closing Date and
such other qualifications and assumptions as are at the time customary in
opinions rendered in comparable circumstances.
In the case of each Replacement Airframe or Replacement
Airframe and one or more Replacement Engines subjected to the Lien of this
Indenture under this Section 7.05(a), promptly upon the recordation of the
Indenture Supplement covering any such Replacement Airframe and Replacement
Engines, if any, pursuant to the Transportation Code (or pursuant to the
applicable law of such other jurisdiction in which such Replacement Airframe and
Replacement Engines, if any, are registered), Company will cause to be delivered
to Loan Trustee a favorable opinion of FAA counsel selected by Company and
reasonably satisfactory to Loan Trustee if at the time of the Event of Loss the
Aircraft was registered under the laws of the United States (or, if at the time
of the Event of Loss the Aircraft was registered under the laws of another
jurisdiction, counsel qualified to opine on matters of registration in such
jurisdiction selected by Company, which counsel shall be reasonably satisfactory
to Loan Trustee) addressed to Loan Trustee as to the due registration of such
Replacement Aircraft and the due recordation of such Indenture Supplement or
such other requisite documents or instruments and the validity and perfection of
the security interest in the Replacement Aircraft granted to Loan Trustee under
this Indenture.
For all purposes hereof, upon the attachment of the Lien of
this Indenture thereto, the Replacement Aircraft and Replacement Engines, if
any, shall become part of the Collateral, the Replacement Airframe shall be
deemed an "Airframe" as defined herein, and each such Replacement Engine shall
be deemed an "Engine" as defined herein. Upon compliance with clauses (A)
through (F) of the third paragraph of this Section 7.05(a), Loan Trustee shall
execute and deliver to Company an appropriate instrument releasing such replaced
Airframe and Engines (if any) installed thereon at the time such Event of Loss
occurred, all proceeds (including, without limitation, insurance proceeds), the
Warranty Rights in respect of such replaced Airframe and Engines (if any) and
all rights relating to the foregoing, from the Lien of this
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Indenture and assigning to Company all claims against third Persons for damage
to or loss of the Airframe and Engines arising from the Event of Loss.
If, after an Event of Loss, Company performs the option set
forth in clause (ii) of the first paragraph of this Section 7.05(a), Loan
Trustee shall execute and deliver to Company an appropriate instrument releasing
the Aircraft, all proceeds (including, without limitation, insurance proceeds),
the Warranty Rights in respect of the Aircraft and all rights relating to the
foregoing from the Lien of this Indenture and assigning to Company all claims
against third Persons for damage to or loss of the Aircraft arising from the
Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon the
occurrence of an Event of Loss with respect to an Engine under circumstances in
which there has not occurred an Event of Loss with respect to the Airframe,
Company shall give Loan Trustee prompt written notice thereof and shall, within
120 days after the occurrence of such Event of Loss, cause to be subjected to
the Lien of this Indenture, as replacement for the Engine with respect to which
such Event of Loss occurred, a Replacement Engine free and clear of all Liens
(other than Permitted Liens).
Prior to or at the time of any replacement under this Section
7.05(b), Company will (i) cause an Indenture Supplement covering such
Replacement Engine to be delivered to Loan Trustee for execution and, upon such
execution, to be filed for recordation pursuant to the Transportation Code or
the applicable laws of any other jurisdiction in which the Aircraft is then
registered, (ii) furnish Loan Trustee with a copy of the original xxxx of sale
or, if the xxxx of sale is unavailable, other evidence of ownership reasonably
satisfactory to Loan Trustee (which may be a copy of an invoice or purchase
order) respecting such Replacement Engine, (iii) cause a financing statement or
statements with respect to such Replacement Engine or other requisite documents
or instruments to be filed in such place or places as necessary in order to
perfect Loan Trustee's interest therein in the United States, or in such other
jurisdiction in which the Engine is then registered, (iv) furnish Loan Trustee
with an opinion of Company's counsel (which may be internal counsel to Company)
reasonably satisfactory to Loan Trustee addressed to Loan Trustee to the effect
that, upon such replacement, the Replacement Engine will be subject to the Lien
of this Indenture, (v) furnish Loan Trustee with a certificate of an aircraft
engineer or appraiser (who may be an employee of Company) certifying to the
reasonable satisfaction of Loan Trustee that such Replacement Engine has a value
and utility (without regard to hours or cycles) at least equal to the Engine so
replaced assuming such Engine was in the condition and repair required by the
terms hereof immediately prior to the occurrence of such Event of Loss and (v)
furnish Loan Trustee with evidence of compliance with the insurance provisions
of Section 7.06 with respect to such Replacement Engine. In the case of each
Replacement Engine subjected to the Lien of this Indenture under this Section
7.05(b), promptly upon the recordation of the Indenture Supplement covering such
Replacement Engine pursuant to the Transportation Code (or pursuant to the
applicable law of such other jurisdiction in which the Aircraft is registered),
Company will cause to be delivered to Loan Trustee an opinion of FAA counsel
selected by Company reasonably satisfactory to Loan Trustee if at the time of
the Event of Loss the Aircraft was registered under the laws of the United
States (or, if at the time of the Event of Loss the Aircraft was registered
under the laws of another jurisdiction, counsel qualified to opine on matters of
registration in such jurisdiction selected by Company, which counsel shall be
reasonably satisfactory to Loan Trustee) addressed to Loan Trustee as to the due
recordation of such
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Indenture Supplement or such other requisite documents or instruments and the
validity and perfection of the security interest in the Replacement Engine
granted to Loan Trustee under this Indenture. For all purposes hereof, upon the
attachment of the Lien of this Indenture thereto, the Replacement Engine shall
become part of the Collateral and shall be deemed an "Engine" as defined herein.
Upon compliance with clauses (i) through (v) of the first sentence of this
paragraph, Loan Trustee shall execute and deliver to Company an appropriate
instrument releasing such replaced Engine, any proceeds (including, without
limitation, insurance proceeds), the Warranty Rights in respect of such replaced
Engine and all rights relating to any of the foregoing from the Lien of this
Indenture and assigning to Company all claims against third Persons for damage
to or loss of such Engine arising from the Event of Loss.
(c) Application of Payments for Event of Loss from
Requisition of Title or Use. Any payments other than insurance proceeds (the
application of which is provided for in Section 7.06) received at any time by
Company or by Loan Trustee from any government or other Person with respect to
an Event of Loss to the Airframe or any Engine, will be applied as follows:
(i) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe that
has been or is being replaced by Company pursuant to Section 7.05(a),
such payments shall be paid over to, or retained by, Loan Trustee and
upon completion of such replacement shall be paid over to, or retained
by, Company;
(ii) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe that
has not been and will not be replaced pursuant to Section 7.05(a), so
much of such payments remaining after reimbursement of Loan Trustee for
costs and expenses that shall not exceed the amounts required to be
paid to Noteholders pursuant to Section 2.10 shall be applied in
reduction of Company's obligation to pay such amounts, if not already
paid by Company, or, if already paid by Company, shall be applied to
reimburse Company for its payment of such amount and the balance, if
any, of such payment remaining thereafter will be paid over to, or
retained by, Company; and
(iii) if such payments are received with respect to an
Engine with regard to which an Event of Loss has occurred, so much of
such payments remaining after reimbursement of Loan Trustee for costs
and expenses shall be paid over to, or retained by, Company; provided
that Company has fully performed its obligations under Section 7.05(b)
with respect to the Event of Loss for which such payments are made.
(d) Requisition for Use by the Government of the Airframe
and the Engines Installed Thereon. In the event of the requisition for use by
any government (it being acknowledged that the use of the Airframe or any Engine
pursuant to the CRAF Program does not constitute such a requisition) of the
Airframe and the Engines or engines installed on the Airframe that does not
constitute an Event of Loss, all of Company's rights and obligations under this
Indenture with respect to the Airframe and such Engines shall continue to the
same extent as if such requisition had not occurred; provided that,
notwithstanding the foregoing, Company's obligations other than payment
obligations shall only continue to the extent feasible.
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All payments received by Company or Loan Trustee from such government for such
use of the Airframe and Engines or engines shall be paid over to, or retained
by, Company.
(e) Requisition for Use by the Government of an Engine
not Installed on the Airframe. If any government requisitions the use, for a
period in excess of sixty (60) days, of any Engine not then installed on the
Airframe, Company will replace such Engine by complying with the terms of
Section 7.05(b) to the same extent as if an Event of Loss had occurred with
respect to such Engine. Upon such replacement, any payments received by Company
or Loan Trustee from such government with respect to such requisition shall be
paid over to, or retained by, Company.
(f) Application of Payments During Existence of Event of
Default. Any amount referred to in Section 7.05 that is payable to or retainable
by Company shall not be paid to or retained by Company if at the time of such
payment or retention an Event of Default or Payment Default has occurred and is
continuing, but shall be held by or paid over to Loan Trustee as security for
the obligations of Company under this Indenture, the Participation Agreement,
the Related Indentures and the Related Participation Agreements. When any such
Event of Default or Payment Default ceases, such amount shall be paid to
Company.
Section 7.06 Insurance. (a) Aircraft Liability Insurance. (i)
Except as provided in clause (ii) of this subsection (a), and subject to the
rights of Company to establish and maintain self-insurance in the manner and to
the extent specified in Section 7.06(c), Company will carry, or cause to be
carried, at no expense to Loan Trustee, aircraft liability insurance (including,
but not limited to, bodily injury, personal injury and property damage
liability, exclusive of manufacturer's product liability insurance) and
contractual liability insurance with respect to the Aircraft (A) in amounts that
are not less than the aircraft liability insurance applicable to similar
aircraft and engines in Company's fleet on which Company carries insurance;
provided that such liability insurance shall not be less than the amount
certified in the insurance report delivered to Loan Trustee on the Closing Date,
(B) of the type covering the same risks as from time to time applicable to
aircraft operated by Company (or, if a Lease is then in effect, by the Permitted
Lessee) of the same type as the Aircraft, and (C) that is maintained in effect
with insurers of recognized responsibility. Any policies of insurance carried in
accordance with this Section 7.06(a) and any policies taken out in substitution
or replacement for any of such policies shall: (A) name Loan Trustee,
Subordination Agent, each Pass Through Trustee, Policy Provider and each
Liquidity Provider as their Interests (as defined below in this Section 7.06)
may appear, as additional insured (the "Additional Insureds"), (B) subject to
the condition of clause (C) below, provide that, in respect of the interest of
the Additional Insureds in such policies, the insurance shall not be invalidated
by any action or inaction of Company and shall insure the Additional Insureds'
Interests as they appear, regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by Company, (C) provide
that, if such insurance is canceled for any reason whatever, or if any change is
made in the policy that materially reduces the amount of insurance or the
coverage certified in the insurance report delivered on the Closing Date to Loan
Trustee, Policy Provider and Liquidity Providers, or if such insurance is
allowed to lapse for nonpayment of premium, such cancellation, change or lapse
shall not be effective as to any Additional Insured for 30 days (seven days, or
such other period as is then generally available in the industry, in the case of
any war risk or allied perils coverage) after receipt by such Additional Insured
of written notice from such insurers of such
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cancellation, change or lapse, (D) provide that the Additional Insureds shall
have no obligation or liability for premiums, commissions, assessments or calls
in connection with such insurance, (E) provide that the insurers shall waive any
rights of (1) set-off, counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of the Additional Insureds
to the extent of any moneys due to the Additional Insureds and (2) subrogation
against the Additional Insureds to the extent that Company has waived its rights
by its agreements to indemnify the Additional Insureds pursuant to the Operative
Documents, (F) be primary without right of contribution from any other insurance
carried by any Additional Insured with respect to its Interests as such in the
Aircraft and (G) expressly provide that all of the provisions thereof, except
the limits of liability, shall operate in the same manner as if there were a
separate policy covering each insured. "Interests" as used in this Section
7.06(a) and in Section 7.06(b) with respect to any Person means the interests of
such Person in the transactions contemplated by the Operative Documents. In the
case of a lease or contract with any government in respect of the Aircraft or
any Engine, or in the case of any requisition for use of the Aircraft or any
Engine by any government, a valid agreement by such government to indemnify
Company, or an insurance policy issued by such government, against any of the
risks that Company is required to insure against hereunder shall be considered
adequate insurance for purposes of this Section 7.06(a) to the extent of the
risks (and in the amounts) that are the subject of such indemnification or
insurance.
(ii) During any period that the Airframe or an Engine, as
the case may be, is on the ground and not being flown, Company may carry or
cause to be carried as to such non-flown Airframe or Engine, in lieu of the
insurance required by clause (i) above, and subject to self-insurance to the
extent permitted by Subsection 7.06(c), insurance otherwise conforming with the
provisions of said clause (i) except that: (A) the amounts of coverage shall not
be required to exceed the amounts of airline liability insurance from time to
time applicable to airframes or engines owned or leased by Company (or, if a
Lease is then in effect, by the Permitted Lessee) of the same type as such
non-flown Airframe or Engine and that are on the ground and not being flown and
(B) the scope of the risks covered and the type of insurance shall be the same
as from time to time are applicable to airframes or engines operated by Company
(or, if a Lease is then in effect, by the Permitted Lessee) of the same type as
such non-flown Airframe or Engine and that are on the ground and not being
flown.
(b) Insurance Against Loss or Damage to Aircraft. (i)
Except as provided in clause (ii) of this subsection (b), and subject to the
rights of Company to establish and maintain self-insurance in the manner and to
the extent specified in Section 7.06(c), Company shall maintain, or cause to be
maintained, in effect with insurers of recognized responsibility, at no expense
to Loan Trustee, all-risk aircraft hull insurance covering the Aircraft and
all-risk coverage with respect to any Engines or Parts while removed from the
Aircraft (including, without limitation, war risk insurance if and to the extent
the same is maintained by Company (or, if a Lease is then in effect, by the
Permitted Lessee) with respect to other similar aircraft operated by Company or
such Permitted Lessee, as the case may be, on the same routes) that is of the
type as from time to time applicable to the aircraft operated by Company (or, if
a Lease is then in effect, by the Permitted Lessee) of the same type as the
Aircraft; provided that (A) such insurance (including the permitted
self-insurance) shall at all times while the Aircraft is subject to this
Indenture be for an amount not less than 110% of the aggregate principal amount
of the Equipment Notes outstanding from time to time, (B) such insurance need
not cover an Engine
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while attached to an airframe not owned, leased or operated by Company, and (C)
such insurance covering Engines and Parts removed from an Airframe or an
airframe or (in the case of Parts) an Engine need be obtained only to the extent
available at reasonable cost (as reasonably determined by Company). Any policies
carried in accordance with this Section 7.06(b) and any policies taken out in
substitution or replacement for any such policies shall: (A) provide that any
insurance proceeds up to an amount equal to the outstanding principal amount of
the Equipment Notes, together with accrued but unpaid interest thereon, plus an
amount equal to the interest that would accrue on the outstanding principal
amount of the Equipment Notes at the Debt Rate in effect on the date of payment
of such insurance proceeds to Loan Trustee (as provided for in this sentence)
during the period commencing on the day following the date of such payment to
Loan Trustee and ending on the Loss Payment Date (the sum of such three amounts
being the "Loan Amount"), payable for any loss or damage constituting an Event
of Loss with respect to the Aircraft and any insurance proceeds in excess of the
amount set forth on Exhibit C up to the amount of the Loan Amount for any loss
or damage to the Aircraft (or Engines) not constituting an Event of Loss with
respect to the Aircraft (or Engines), shall be paid to Loan Trustee as long as
the Indenture has not been discharged, and that all other amounts shall be
payable to Company, unless the insurer has received notice that an Event of
Default exists, in which case all insurance proceeds for any loss or damage to
the Aircraft (or Engines) shall be payable to Loan Trustee, (B) subject to the
conditions of clause (C) below, provide that, in respect of the interests of the
Additional Insureds in such policies, the insurance shall not be invalidated by
any action or inaction of Company and shall insure the Additional Insureds'
Interests as they appear, regardless of any breach or violation by Company of
any warranty, declaration or condition contained in such policies, (C) provide
that if such insurance is canceled for any reason, or if any change is made in
the insurance that materially reduces the coverage (not including the amount)
certified in the insurance report delivered on the Closing Date to Loan Trustee,
Policy Provider and Liquidity Providers or if such insurance is allowed to lapse
for nonpayment of premium, such cancellation, change or lapse shall not be
effective as to the Additional Insureds for 30 days (seven days, or such other
period as is customarily available in the industry, in the case of war risk or
allied perils coverage) after receipt by the Additional Insureds of written
notice from such insurers of such cancellation, change or lapse, (D) provide
that the Additional Insureds shall have no obligation or liability for premiums,
commissions, assessments or calls in connection with such insurance, (E) provide
that the insurers shall waive rights of (1) setoff, counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability of
the Additional Insureds to the extent of any moneys due to the Additional
Insureds and (2) subrogation against the Additional Insureds to the extent
Company has waived its rights by its agreement to indemnify the Additional
Insureds pursuant to the Operative Documents and (F) be primary without right of
contribution from any other insurance carried by any Additional Insured with
respect to its Interests as such in the Aircraft. In the case of a lease or
contract with any government in respect of the Aircraft or any Engine, or in the
case of any requisition for use of the Aircraft or any Engine by any government,
a valid agreement by such government to indemnify Company, or an insurance
policy issued by such government, against any risks which Company is required
hereunder to insure against shall be considered adequate insurance for purposes
of this Section 7.06(b) to the extent of the risks (and in the amounts) that are
the subject of such indemnification or insurance.
(ii) During any period that the Airframe or an Engine is
on the ground and not being flown, Company may carry or cause to be carried as
to such non-flown Airframe or
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Engine, in lieu of the insurance required by clause (i) above, and subject to
self-insurance to the extent permitted by Subsection 7.06(c), insurance
otherwise conforming with the provisions of said clause (i) except that the
scope of the risks covered and the type of insurance shall be the same as from
time to time applicable to airframes and engines operated by Company (or, if a
Lease is then in effect, by the Permitted Lessee) of the same type as such
non-flown Airframe or Engine and that are on the ground and not being flown;
provided that, subject to self-insurance to the extent permitted by Subsection
7.06(c), Company shall maintain or cause to be maintained insurance against risk
of loss or damage to such non-flown Airframe or Engine in an amount at least
equal to 110% of the aggregate outstanding principal amount of the Equipment
Notes during such period that such Airframe or Engine is on the ground and not
being flown.
(c) Self-Insurance. Company may from time-to-time
self-insure, by way of deductible, self-insured retention, premium adjustment or
franchise or otherwise (including, with respect to insurance maintained pursuant
to Subsections 7.06(a) or 7.06(b), insuring for a maximum amount that is less
than the amounts set forth in Sections 7.06(a) and 7.06(b)), the risks required
to be insured against pursuant to Sections 7.06(a) and 7.06(b), but in no case
shall the self-insurance with respect to all of the aircraft and engines in
Company's fleet (including, without limitation, the Aircraft) exceed for any
12-month policy year 1% of the average aggregate insurable value (for the
preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Company carries insurance, unless an insurance broker of
national standing certifies that the standard among other major United States
airlines is a higher level of self-insurance, in which case Company may
self-insure the Aircraft to such higher level. In addition to the foregoing
right to self-insure, Company may self-insure to the extent of (1) any
deductible per occurrence that, in the case of the Aircraft, is not in excess of
the amount customarily allowed as a deductible in the industry or is required to
facilitate claims handling or (2) any applicable mandatory minimum per aircraft
(or if applicable per annum or other period) hull or liability insurance
deductibles imposed by the aircraft hull or liability insurers.
(d) Application of Insurance Payments. All losses will be
adjusted by Company with the insurers. As between Loan Trustee and Company it is
agreed that all insurance payments received under policies required to be
maintained by Company hereunder, exclusive of any payments received in excess of
the Loan Amount for the Aircraft from such policies, as the result of the
occurrence of an Event of Loss with respect to the Airframe or an Engine will be
applied as follows:
(i) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe that
has been or is being replaced by Company pursuant to Section 7.05(a),
such payments shall be paid over to, or retained by, Loan Trustee and
upon completion of such replacement shall be paid over to, or retained
by, Company;
(ii) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe that
has not been and will not be replaced as contemplated by Section
7.05(a), so much of such payments remaining after reimbursement of Loan
Trustee for its costs and expenses as do not exceed the amounts
required to be paid by Company pursuant to Section 2.10 shall be
applied in reduction of Company's obligation to pay such amounts, if
not already paid by Company, or, if
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already paid by Company, shall be applied to reimburse Company for its
payment of such amounts and the balance, if any, of such payment
remaining thereafter will be paid over to, or retained by, Company; and
(iii) if such payments are received with respect to an
Engine, so much of such payments remaining after reimbursement of Loan
Trustee for its costs and expenses shall be paid over to, or retained
by, Company; provided that Company has fully performed its obligations
under Section 7.05(b) with respect to the Event of Loss for which such
payments are made.
In all events, the insurance payment of any property damage
loss received under policies maintained by Company in excess of the Loan Amount
for the Aircraft shall be paid to Company.
The insurance payments for any loss or damage to the Airframe
or an Engine not constituting an Event of Loss with respect to the Airframe or
such Engine will be applied in payment (or to reimburse Company) for repairs or
for replacement property in accordance with the terms of Sections 7.02 and 7.04,
and any balance remaining after compliance with such Sections with respect to
such loss or damage shall be paid to Company. Any amount referred to in the
preceding sentence or in clause (i), (ii) or (iii) of the first paragraph of
this Section 7.06(d) that is payable to Company shall not be paid to Company
(or, if it has been previously paid directly to Company, shall not be retained
by Company) if at the time of such payment an Event of Default or Payment
Default has occurred and is continuing, but shall be paid to and held by Loan
Trustee as security for the obligations of Company under this Indenture, and
when any such Event of Default or Payment Default ceases, such amount shall, to
the extent not theretofore applied as provided herein, be paid to Company.
(e) Reports, Etc. On or before the Closing Date and
annually following renewal of Company's insurance coverage, Company will furnish
to Loan Trustee, Policy Provider and Liquidity Providers a report signed by a
firm of independent aircraft insurance brokers appointed by Company (which
brokers may be in the regular employ of Company), stating the opinion of such
firm that the insurance then carried and maintained on the Aircraft complies
with the terms hereof and all premiums then due in connection with the insurance
have been paid. All information contained in such report shall be Confidential
Information and shall be treated by Loan Trustee, Policy Provider and Liquidity
Providers and each of their affiliates and officers, directors, agents and
employees in accordance with the provisions of Section 10.16. Company will cause
such firm to notify Loan Trustee, Policy Provider and Liquidity Providers of any
act or omission on the part of Company of which such firm has knowledge that
might invalidate or render unenforceable, in whole or in part, any insurance on
the Aircraft. Company will also cause such firm to notify Loan Trustee, Policy
Provider and Liquidity Provider as promptly as practicable after such firm
acquires knowledge that an interruption of any insurance carried and maintained
on the Aircraft pursuant to this Section 7.06 will occur. Such information may
only be provided to other Persons in accordance with Section 10.16.
(f) Salvage Rights; Other. All salvage rights to the
Airframe and each Engine shall remain with Company's insurers at all times, and
any insurance policies of Loan Trustee insuring the Airframe or any Engine shall
provide for a release to Company of any and all
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salvage rights in and to the Airframe or any Engine. Neither Loan Trustee nor
any Noteholder may, directly or indirectly, obtain insurance for its own account
with respect to the Airframe or any Engine if such insurance would limit or
otherwise adversely affect the coverage or amounts payable under, or increase
the premiums for, any insurance required to be maintained pursuant to this
Section 7.06 or any other insurance maintained with respect to the Aircraft or
any other aircraft in Company's fleet.
(g) Right to Pay Premium. Notwithstanding the foregoing,
Company agrees that in the event of cancellation of any insurance due to the
nonpayment of premiums, Loan Trustee shall have the option, in its sole
discretion, to pay any such premium that is due in respect of the coverage
pursuant to this Indenture and to maintain such coverage until the scheduled
expiry date of such insurance and, in such event, Company shall, upon demand,
reimburse Loan Trustee for amounts so paid by it.
ARTICLE VIII
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01 Resignation or Removal; Appointment of Successor.
(a) The resignation or removal of Loan Trustee and the appointment of a
successor Loan Trustee shall become effective only upon the successor Loan
Trustee's acceptance of appointment as provided in this Section 8.01. Loan
Trustee or any successor thereto must resign if at any time it ceases to be
eligible in accordance with the provisions of Section 8.01(c) and may resign at
any time without cause by giving at least 60 days' prior written notice to
Company and each Noteholder. In addition, either Company (so long as no Event of
Default or Payment Default shall have occurred and be continuing) or a Majority
in Interest of Noteholders (but only with the consent of Company so long as no
Event of Default or Payment Default shall have occurred and be continuing), may
at any time remove Loan Trustee without cause by an instrument in writing
delivered to Loan Trustee and each Noteholder, and, in case of a removal by a
Majority in Interest of Noteholders, to Company. In the case of the resignation
or removal of Loan Trustee, Company shall promptly appoint a successor Loan
Trustee. If a successor Loan Trustee has not been appointed within 60 days after
such notice of resignation or removal, Loan Trustee, Company or any Noteholder
may apply to any court of competent jurisdiction to appoint a successor Loan
Trustee to act until such time, if any, as a successor is appointed as above
provided. The successor Loan Trustee so appointed by such court shall
immediately and without further act be superseded by any successor Loan Trustee
appointed as above provided.
(b) Any successor Loan Trustee, however appointed, shall
execute and deliver to the predecessor Loan Trustee and Company an instrument
accepting such appointment and assuming the obligations of Loan Trustee arising
from and after the time of such appointment, and thereupon such successor Loan
Trustee, without further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Loan Trustee in the
trust hereunder applicable to it with like effect as if originally named Loan
Trustee herein; but nevertheless upon the written request of such successor Loan
Trustee, such predecessor Loan Trustee shall execute and deliver an instrument
transferring to such successor Loan Trustee all the estates, properties, rights
and powers of such predecessor Loan Trustee, and such predecessor Loan Trustee
shall duly assign, transfer, deliver and pay over to such successor Loan Trustee
all
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monies or other property and all other books and records, or true, correct and
complete copies thereof, then held by such predecessor Loan Trustee.
(c) This Indenture shall at all times have a Loan
Trustee, however appointed, that is a Citizen of the United States (without the
use of a voting trust) and a bank or trust company having a combined capital and
surplus of at least $100,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence or hereafter
incurred, are fully and unconditionally guaranteed by a corporation organized
and doing business under the laws of the United States or any state or territory
thereof or the District of Columbia and having a combined capital and surplus of
at least $100,000,000) or a corporation with a net worth of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of Loan Trustee upon reasonable or customary
terms. If such bank, trust company or corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 8.01(c) the combined capital and surplus
of such bank, trust company or corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of conditions so
published. In case at any time Loan Trustee ceases to be eligible in accordance
with the provisions of this Section 8.01(c), Loan Trustee shall resign
immediately in the manner and with the effect specified in Section 8.01(a).
(d) Any corporation into which Loan Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which Loan Trustee is a party,
or any corporation to which substantially all the corporate trust business of
Loan Trustee may be transferred, shall, subject to the terms of Section 8.01(c),
be a successor Loan Trustee under this Indenture without further act.
Section 8.02 Appointment of Additional and Separate Trustees.
(a) Whenever (i) Loan Trustee deems it necessary or desirable in order to
conform to any law of any jurisdiction in which all or any part of the
Collateral is situated or to make any claim or bring any suit with respect to or
in connection with the Collateral, any Operative Document or any of the
transactions contemplated by the Operative Documents, (ii) Loan Trustee shall be
advised by counsel satisfactory to it that it is necessary or prudent in the
interests of Noteholders (and Loan Trustee shall so advise Company) or (iii)
Loan Trustee has been requested to do so by a Majority in Interest of
Noteholders, then in any such case, Loan Trustee and, upon the written request
of Loan Trustee, Company, shall execute and deliver an indenture supplemental
hereto and such other instruments as from time to time are necessary or
advisable either (1) to constitute one or more banks or trust companies or
corporations meeting the requirements of Section 8.01(c) and approved by Loan
Trustee, either to act jointly with Loan Trustee as additional trustee or
trustees of all or any part of the Collateral or to act as separate trustee or
trustees of all or any part of the Collateral, in each case with such rights,
powers, duties and obligations consistent with this Indenture as is provided in
such supplemental indenture or other instruments as Loan Trustee or a Majority
in Interest of Noteholders deems necessary or advisable, or (2) to clarify, add
to or subtract from the rights, powers, duties and obligations theretofore
granted any such additional or separate trustee, subject in each case to the
remaining provisions of this Section 8.02. If no Event of Default has occurred
and is continuing, no additional or supplemental trustee shall be appointed
without Company's consent. If an Event of Default shall have occurred and be
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continuing, Loan Trustee may act under the foregoing provisions of this Section
8.02(a) without the concurrence of Company, and Company hereby irrevocably
appoints (which appointment is coupled with an interest) Loan Trustee as its
agent and attorney-in-fact to act for it under the foregoing provisions of this
Section 8.02(a). Loan Trustee may, in such capacity, execute, deliver and
perform any such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate trustee or for
the clarification of, addition to or subtraction from the rights, powers, duties
or obligations theretofore granted to any such additional or separate trustee,
subject in each case to the remaining provisions of this Section 8.02. In case
any additional or separate trustee appointed under this Section 8.02(a) becomes
incapable of acting, resigns or is removed, all the assets, property, rights,
powers, trusts, duties and obligations of such additional or separate trustee
shall revert to Loan Trustee until a successor additional or separate trustee is
appointed as provided in this Section 8.02(a).
(b) No additional or separate trustee shall be entitled
to exercise any of the rights, powers, duties and obligations conferred upon
Loan Trustee in respect of the custody, investment and payment of monies and all
monies received by any such additional or separate trustee from or constituting
part of the Collateral or otherwise payable under any Operative Documents to
Loan Trustee shall be promptly paid over by it to Loan Trustee. All other
rights, powers, duties and obligations conferred or imposed upon any additional
or separate trustee shall be exercised or performed by Loan Trustee and such
additional or separate trustee jointly except to the extent that applicable law
of any jurisdiction in which any particular act is to be performed renders Loan
Trustee incompetent or unqualified to perform such act, in which event such
rights, powers, duties and obligations (including the holding of title to all or
part of the Collateral in any such jurisdiction) shall be exercised and
performed by such additional or separate trustee. No additional or separate
trustee shall take any discretionary action except on the instructions of Loan
Trustee or a Majority in Interest of Noteholders. No trustee hereunder shall be
personally liable by reason of any act or omission of any other trustee
hereunder, except that Loan Trustee shall be liable for the consequences of its
lack of reasonable care in selecting, and Loan Trustee's own actions in acting
with, any additional or separate trustee. Each additional or separate trustee
appointed pursuant to this Section 8.02 shall be subject to, and shall have the
benefit of Articles IV, V, VI, VIII, IX and X hereof insofar as they apply to
Loan Trustee. The powers of any additional or separate trustee appointed
pursuant to this Section 8.02 shall not in any case exceed those of Loan
Trustee.
(c) If at any time Loan Trustee deems it no longer
necessary or desirable or in the event that Loan Trustee has been requested to
do so in writing by a Majority in Interest of Noteholders, Loan Trustee and,
upon the written request of Loan Trustee, Company, shall execute and deliver an
indenture supplemental hereto and all other instruments and agreements necessary
or proper to remove any additional or separate trustee. Loan Trustee may act on
behalf of Company under this Section 8.02(c) when and to the extent it could so
act under Section 8.02(a) hereof. In any case, Company may remove an additional
or separate trustee in the manner set forth in Section 8.01.
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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, Company and Loan Trustee may enter
into one or more agreements supplemental hereto without notice to or consent of
any Noteholder for any of the following purposes: (i) to evidence the succession
of another Person to Company and the assumption by any such successor of the
covenants of Company contained in any Operative Documents pursuant to Section
6.02(e) of the Participation Agreement; (ii) to cure any defect or inconsistency
herein or in the Equipment Notes (provided, that such change does not adversely
affect the interests of any Noteholder in its capacity solely as Noteholder);
(iii) to cure any ambiguity or correct any mistake; (iv) to evidence the
succession of a new trustee hereunder pursuant hereto or the removal of the
trustee hereunder or to provide for or facilitate the appointment of an
additional or separate trustee pursuant to Section 8.02 hereof; (v) to convey,
transfer, assign, mortgage or pledge any property to or with Loan Trustee; (vi)
to make any other provisions or amendments with respect to matters or questions
arising hereunder or under the Equipment Notes, or to amend, modify or
supplement any provision hereof or thereof, so long as such action shall not
adversely affect the interests of Noteholders, Policy Provider or either
Liquidity Provider; (vii) to correct or amplify the description of any property
at any time subject to the Lien of this Indenture, or better to assure, convey
and confirm unto Loan Trustee any property subject or required to be subject to
the Lien of this Indenture or to subject to the Lien of this Indenture the
Airframe or Engines or any Replacement Airframe or Replacement Engine; (viii) to
add to the covenants of Company for the benefit of Noteholders, or to surrender
any rights or power herein conferred upon Company; (ix) to add to the rights of
Noteholders; (x) to include on the Equipment Notes any legend required by law or
as otherwise necessary or advisable and (xi) to comply with any applicable
requirements of the Trust Indenture Act of 1939, as amended, or any other
requirements of applicable law or of any regulatory body.
Section 9.02 Amendments to this Indenture with Consent of
Holders. (a) With the written consent of a Majority in Interest of Noteholders,
Company may, and Loan Trustee shall, subject to Section 9.06, at any time and
from time to time, enter into such supplemental agreements to add any provisions
to or to change or eliminate any provisions of this Indenture or of any such
supplemental agreements or to modify in any manner the rights and obligations of
Company, Loan Trustee and of Noteholders under this Indenture; provided,
however, that without the consent of each Noteholder affected thereby and Policy
Provider, an amendment under this Section 9.02 may not:
(1) reduce the principal amount of, Break Amount, if any,
Make-Whole Amount, if any, or interest on, any Equipment Note;
(2) change the date on which any principal amount of,
Break Amount, if any, Make-Whole Amount, if any, or interest on any
Equipment Note, is due or payable;
(3) create any Lien with respect to the Collateral prior
to or pari passu with the Lien thereon under this Indenture except such
as are permitted by this Indenture, or
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deprive any Noteholder of the benefit of the Lien on the Collateral
created by this Indenture;
(4) reduce the percentage of the outstanding principal
amount of the Equipment Notes the consent of whose holders is required
for any such supplemental agreement, or the consent of whose holders is
required for any waiver of compliance with certain provisions of this
Indenture or of certain defaults hereunder or their consequences
provided for in this Indenture; or
(5) make any change in Section 4.05 or this Section 9.02,
except to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of each Noteholder
affected thereby.
Notwithstanding the foregoing, (i) neither Company nor Loan
Trustee shall enter into any amendment, waiver or modification of, or supplement
or consent to, this Indenture or any other Operative Document other than the
Participation Agreement (which is addressed in Section 9.03) which shall reduce,
modify or amend any indemnities in favor of Policy Provider, Primary Liquidity
Provider or Above Cap Liquidity Provider without the consent of Policy Provider,
Primary Liquidity Provider or Above Cap Liquidity Provider that is subject to
such reduction, modification or amendment and (ii) without the consent of each
holder of an affected Related Equipment Note then outstanding, no amendment,
waiver or modification of the terms hereof shall modify Section 3.03, except as
provided herein.
(b) It is not necessary under this Section 9.02 for
Noteholders to consent to the particular form of any proposed supplemental
agreement, but it is sufficient if they consent to the substance thereof.
(c) Promptly after the execution by Company and Loan
Trustee of any supplemental agreement pursuant to the provisions of this Section
9.02, Loan Trustee shall transmit by first-class mail a notice, setting forth in
general terms the substance of such supplemental agreement, to all Noteholders,
as the names and addresses of such Noteholders appear on the Equipment Note
Register. Any failure of Loan Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental agreement.
Section 9.03 Amendments, Waivers, Etc. of the Participation
Agreement. Without the consent of a Majority in Interest of Noteholders, the
respective parties to the Participation Agreement may not modify, amend or
supplement such agreement, or give any consent, waiver, authorization or
approval thereunder, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder; provided, however, that,
without the consent of Loan Trustee or any Noteholder, the Participation
Agreement may be modified, amended or supplemented in order (i) to cure any
defect or inconsistency therein or to cure any ambiguity or correct any mistake,
(ii) to amend, modify or supplement any provision thereof or make any other
provision with respect to matters or questions arising thereunder or under this
Indenture, provided that the making of any such other provision shall not
materially adversely affect the interests of Noteholders or (iii) to make any
other change, or reflect any other matter,
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of the kind referred to in clauses (i) through (xi) of Section 9.01.
Notwithstanding the foregoing, without the consent of either Liquidity Provider
or Policy Provider, Company shall not enter into any amendment, waiver or
modification of or supplement or consent to the Participation Agreement which
shall reduce, modify or amend any indemnities in favor of such Liquidity
Provider or Policy Provider contained therein.
Section 9.04 Revocation and Effect of Consents. Until an
amendment or waiver becomes effective, a consent to it by a Noteholder is a
continuing consent by Noteholder and every subsequent Noteholder, even if
notation of the consent is not made on any Equipment Note.
Section 9.05 Notation on or Exchange of Equipment Notes. Loan
Trustee may place an appropriate notation about an amendment or waiver on any
Equipment Note thereafter executed. Loan Trustee in exchange for such Equipment
Notes may execute new Equipment Notes that reflect the amendment or waiver.
Section 9.06 Trustee Protected. If, in the reasonable opinion
of the institution acting as Loan Trustee, any document required to be executed
by it pursuant to the terms of Section 9.01 or 9.02 adversely affects any right,
duty, immunity or indemnity with respect to such institution under this
Indenture, such institution may in its discretion decline to execute such
document.
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination of Indenture. (a) Upon (or at any
time after) payment in full of the principal amount, Make-Whole Amount, if any,
Break Amount, if any, and interest on and all other amounts due under all
Equipment Notes and provided that there shall then be no other Secured
Obligations due to Noteholders, Indenture Indemnitees and Loan Trustee hereunder
or under the Participation Agreement or the other Operative Documents, Company
and Loan Trustee shall be deemed to have been released and discharged from their
respective obligations hereunder and under the Equipment Notes and the security
interest, mortgage lien and all other estate, right, title and interest granted
by this Indenture shall cease and become null and void and all of the property,
rights, interests and privileges granted as security for the Equipment Notes
shall revert to and revest in Company without any other act or formality
whatsoever, and Loan Trustee shall, upon the written request of Company, execute
and deliver to, or as directed in writing by, Company an appropriate instrument
(in due form for recording) releasing the Aircraft and the balance of the
Collateral from the Lien of this Indenture together with such other instruments
and documents as Company reasonably requests to give effect to the release and
termination, and, in such event, this Indenture and the trusts created hereby
shall terminate and this Indenture shall be of no further force or effect;
provided, however, that this Indenture and the trusts created hereby shall
earlier terminate and this Indenture shall be of no further force or effect upon
any sale or other final disposition by Loan Trustee of all property constituting
part of the Collateral and the final distribution by Loan Trustee of all monies
or other property or proceeds constituting part of the Collateral in accordance
with the terms hereof. Except as otherwise provided above, this Indenture and
the
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trusts created hereby shall continue in full force and effect in accordance with
the terms hereof. Notwithstanding the foregoing, if this Indenture has not
terminated prior to the Final Payment Date, this Indenture shall not terminate
on the Final Payment Date unless no Event of Default of the type referred to in
Section 4.01(j) exists.
Section 10.02 No Legal Title to Collateral in Noteholders. No
Noteholder shall have legal title to any part of the Collateral. No transfer, by
operation of law or otherwise, of any Equipment Note or other right, title and
interest of any Noteholder in and to the Collateral or hereunder shall operate
to terminate this Indenture or entitle such Noteholder or any successor or
transferee of such holder to an accounting or to the transfer to it of any legal
title to any part of the Collateral.
Section 10.03 Sale of Aircraft by Loan Trustee is Binding. Any
sale or other conveyance of the Aircraft, the Airframe, any Engine or any
interest therein by Loan Trustee made pursuant to the terms of this Indenture
shall bind Noteholders and Company and shall be effective to transfer or convey
all right, title and interest of Loan Trustee, Company and such Noteholders in
and to such Aircraft, Airframe, Engine or interest therein. No purchaser or
other grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application of
any sale or other proceeds with respect thereto by Noteholders.
Section 10.04 Indenture for Benefit of Company, Loan Trustee
and Noteholders. Except as provided in the following sentence, nothing in this
Indenture, whether express or implied, shall be construed to give any Person
other than Company, Loan Trustee, Noteholders or the other Indenture Indemnitees
any legal or equitable right, remedy or claim under or in respect of this
Indenture. Company agrees and acknowledges that Policy Provider, each Related
Noteholder and each Related Loan Trustee shall each be a third party beneficiary
of the covenants and agreements of Company set forth herein and may rely on the
covenants and agreements of Company set forth herein to the same extent as if
such covenants and agreements of Company were made to such Person directly.
Section 10.05 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents required or permitted under the terms
and provisions of this Indenture shall be in English and in writing, and given
by United States registered or certified mail, courier service or facsimile, and
any such notice shall be effective when delivered (or, if delivered by
facsimile, upon completion of transmission and confirmation by the sender (by a
telephone call to a representative of the recipient or by machine confirmation)
that such transmission was received) addressed as follows:
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(i) if to Company, addressed to:
Delta Air Lines, Inc.
0000 Xxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Treasurer, Dept. 856
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to the General Counsel at the same
address, but Dept. 971
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(ii) if to Loan Trustee, addressed to:
U.S. Bank Trust National Association
000 Xxxxxx Xxxxxx
Xxxxxxx Square
Hartford, Connecticut 06103
Attention: Corporate Trust Division
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or if to any Noteholder, addressed to such Noteholder at its address set forth
in the Equipment Note Register maintained pursuant to Section 2.07 hereof.
Any party, by notice to the other parties hereto, may
designate different addresses for subsequent notices or communications. Whenever
the words "notice" or "notify" or similar words are used herein, they mean the
provision of formal notice as set forth in this Section 10.05.
Section 10.06 Severability. Any provision of this Indenture
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 10.07 No Oral Modification or Continuing Waivers. No
terms or provisions of this Indenture or of the Equipment Notes may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by Company and Loan Trustee, in compliance with Article IX. Any waiver of
the terms hereof or of any Equipment Note shall be effective only in the
specific instance and for the specific purpose given.
Section 10.08 Successors and Assigns. All covenants and
agreements contained herein shall bind and inure to the benefit of, and be
enforceable by, each of the parties hereto and the successors and permitted
assigns of each, all as herein provided. Any request,
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notice, direction, consent, waiver or other instrument or action by any
Noteholder shall bind the successors and permitted assigns of such Noteholder.
Each Noteholder by its acceptance of an Equipment Note agrees to be bound by
this Indenture and all provisions of the Participation Agreement applicable to a
Noteholder.
Section 10.09 Headings. The headings of the various Articles
and Sections herein and in the Table of Contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
Section 10.10 Normal Commercial Relations. Anything contained
in this Indenture to the contrary notwithstanding, Loan Trustee, any Noteholder
or any other party to any of the Operative Documents or the Pass Through
Documents or any of their affiliates may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with Company,
fully to the same extent as if this Indenture were not in effect, including
without limitation the making of loans or other extensions of credit to Company
for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
Section 10.11 Voting by Noteholders. All votes of Noteholders
shall be governed by a vote of a Majority in Interest of Noteholders, except as
otherwise provided herein.
Section 10.12 Section 1110. It is the intention of the parties
hereto that the security interest created hereby, to the fullest extent
available under applicable law, entitles Loan Trustee, on behalf of Noteholders,
to all of the benefits of Section 1110 with respect to the Aircraft.
Section 10.13 Company's Performance and Rights. Any obligation
imposed on Company herein shall require only that Company perform or cause to be
performed such obligation, even if stated as a direct obligation, and the
performance of any such obligation by any permitted assignee, lessee or
transferee under an assignment, lease or transfer agreement then in effect and
in accordance with the provisions of the Operative Documents shall constitute
performance by Company and, to the extent of such performance, discharge such
obligation by Company. Except as otherwise expressly provided herein, any right
granted to Company in this Indenture shall grant Company the right to permit
such right to be exercised by any such assignee, lessee or transferee. The
inclusion of specific references to obligations or rights of any such assignee,
lessee or transferee in certain provisions of this Indenture shall not in any
way prevent or diminish the application of the provisions of the two sentences
immediately preceding with respect to obligations or rights in respect of which
specific reference to any such assignee, lessee or transferee has not been made
in this Indenture.
Section 10.14 Counterparts. This Indenture may be executed in
any number of counterparts (and each of the parties hereto shall not be required
to execute the same counterpart). Each counterpart of this Indenture including a
signature page or pages executed by each of the parties hereto shall be an
original counterpart of this Indenture, but all of such counterparts together
shall constitute one instrument.
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SECTION 10.15 GOVERNING LAW. THIS INDENTURE HAS BEEN DELIVERED
IN THE STATE OF NEW YORK AND THIS INDENTURE, ANY INDENTURE SUPPLEMENT AND THE
EQUIPMENT NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.16 Confidential Information. The term "Confidential
Information" means: (a) the existence and terms of any lease of the Airframe or
Engines pursuant to Section 7.02(a) and the identity of the Permitted Lessee
thereunder; (b) all information obtained in connection with any inspection
conducted by Loan Trustee or its representative pursuant to Section 7.03(a); (c)
each certification furnished to Loan Trustee pursuant to Sections 7.06(a) and
7.06(b); (d) all information contained in each report furnished to Loan Trustee
pursuant to Section 7.06(e); and (e) all information regarding the Warranty
Rights. All Confidential Information shall be held confidential by Loan Trustee
and each Noteholder and each affiliate, agent, officer, director, or employee of
any thereof and shall not be furnished or disclosed by any of them to anyone
other than (i) Loan Trustee or any Noteholder and (ii) their respective bank
examiners, auditors, accountants, agents and legal counsel, and except as may be
required by an order of any court or administrative agency or by any statute,
rule, regulation or order of any governmental authority.
Section 10.17 Submission to Jurisdiction. Each of the parties
hereto, and by acceptance of Equipment Notes, each Noteholder, to the extent it
may do so under applicable law, for purposes hereof and of all other Operative
Agreements hereby (a) irrevocably submits itself to the non-exclusive
jurisdiction of the courts of the State of New York sitting in the City of New
York and to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Indenture, the subject matter hereof or any
of the transactions contemplated hereby brought by any party or parties hereto
or thereto, or their successors or permitted assigns and (b) waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is improper
or that this Indenture or the Equipment Notes or the subject matter hereof or
any of the transactions contemplated hereby may not be enforced in or by such
courts.
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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:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity, except
as expressly provided herein, but
solely as Loan Trustee
By: __________________________________
Name:
Title:
EXHIBIT A
to INDENTURE AND
SECURITY AGREEMENT
INDENTURE SUPPLEMENT NO. ___
INDENTURE SUPPLEMENT NO. __ , dated _____________, ____
("Indenture Supplement"), between DELTA AIR LINES, INC. ("Company") and U.S.
BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as
Loan Trustee under the Indenture (each as hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Indenture and Security Agreement (N195DN), dated
as of January 30, 2003 (the "Indenture"; capitalized terms used herein without
definition shall have the meanings specified therefor in Annex A to the
Indenture), between Company and U.S. Bank Trust National Association, not in its
individual capacity, except as expressly provided therein, but solely as Loan
Trustee ("Loan Trustee"), provides for the execution and delivery of supplements
thereto substantially in the form hereof which shall particularly describe the
Aircraft, and shall specifically grant a security interest in the Aircraft to
Loan Trustee; and
[WHEREAS, the Indenture relates to the Airframe and Engines
described in Annex A attached hereto and made a part hereof, and a counterpart
of the Indenture is attached to and made a part of this Indenture Supplement;]*
[WHEREAS, Company has, as provided in the Indenture,
heretofore executed and delivered to Loan Trustee Indenture Supplement(s) for
the purpose of specifically subjecting to the Lien of the Indenture certain
airframes and/or engines therein described, which Indenture Supplement(s) is/are
dated and has/have been duly recorded with the FAA as set forth below, to wit:
Date Recordation Date FAA Document Number]**
---- ---------------- --------------------
NOW, THEREFORE, to secure the prompt and complete payment
(whether at stated maturity, by acceleration or otherwise) of principal of,
Make-Whole Amount, if any, and interest on, the Equipment Notes and all other
amounts payable by Company under the Operative Documents and the performance and
observance by Company of all the agreements and covenants to be performed or
observed by Company for the benefit of Noteholders and Indenture Indemnitees
contained in the Operative Documents, and in consideration of the premises and
of the covenants contained in the Operative Documents, and for other good and
valuable
--------------
* Use for Indenture Supplement No. 1 only.
** Use for all Indenture Supplements other than Indenture Supplement No. 1.
A-1
consideration given by Loan Trustee, Noteholders and Indenture Indemnitees to
Company at or before the Closing Date, the receipt of which is hereby
acknowledged, Company does hereby grant, bargain, sell, convey, transfer,
mortgage, assign, pledge and confirm unto Loan Trustee and its successors in
trust and permitted assigns, for the security and benefit of Loan Trustee,
Noteholders and Indenture Indemnitees, a first priority security interest in,
and mortgage lien on, all estate, right, title and interest of Company in, to
and under the Aircraft, including the Airframe and Engines described in Annex A
attached hereto, whether or not any such Engine from time to time is installed
on the Airframe or any other airframe or any other aircraft, and any and all
Parts relating thereto, and, to the extent provided in the Indenture, all
substitutions and replacements of, and additions, improvements, accessions and
accumulations to, the Aircraft, including the Airframe, the Engines and any and
all Parts (in each case other than any substitutions, replacements, additions,
improvements, accessions and accumulations that constitute items excluded from
the definition of Parts by clauses (b), (c), (d), (e) and (f) thereof) relating
thereto;
To have and to hold all and singular the aforesaid property
unto Loan Trustee, and its successors and assigns, in trust for the ratable
benefit and security of Noteholders and Indenture Indemnitees, except as
otherwise provided in the Indenture, including Section 2.13 and Article III of
the Indenture, without any preference, distinction or priority of any one
Equipment Note over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and subject to the terms and provisions set forth
in the Indenture.
This Indenture Supplement shall be construed as supplemental
to the Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
THIS INDENTURE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF
NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the undersigned have caused this Indenture
Supplement No. __ to be duly executed by their respective duly authorized
officers, on the date first above written.
DELTA AIR LINES, INC.
By: __________________________________
Name:
Title:
A-2
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Loan Trustee
By: __________________________________
Name:
Title:
A-3
Annex A to
Indenture Supplement No. __
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
Manufacturer Model FAA Registration No. Manufacturer's Serial No.
------------ ----- -------------------- -------------------------
ENGINES
Manufacturer Model Manufacturer's Serial No.
------------ ----- -------------------------
Each Engine is of 750 or more "rated take-off horsepower" or
the equivalent of such horsepower.
Annex A-1
EXHIBIT B
to INDENTURE AND
SECURITY AGREEMENT
LIST OF PERMITTED COUNTRIES
Australia Germany Norway
Austria Greece Peoples' Republic of China
Bahamas Hungary Poland
Barbados Iceland Portugal
Belgium India Republic of China (Taiwan)
Bermuda Islands Ireland Singapore
Brazil Italy South Africa
British Virgin Islands Jamaica South Korea
Canada Japan Spain
Cayman Islands Liechtenstein Sweden
Chile Luxembourg Switzerland
Czech Republic Mexico Thailand
Denmark Monaco Trinidad and Tobago
Ecuador Netherlands Antilles United Kingdom
Finland Netherlands, the
France New Zealand
B-1
EXHIBIT C
to INDENTURE AND
SECURITY AGREEMENT
AIRCRAFT TYPE VALUE FOR SECTION 7.06(b)
Boeing 767-332ER - $15,000,000
C-1
SCHEDULE I
to INDENTURE AND
SECURITY AGREEMENT
DESCRIPTION OF EQUIPMENT NOTES
The information set forth below this text in this Schedule has been
intentionally omitted from the FAA filing copy as the parties hereto deem it to
contain confidential information.
Original Principal Amount Maturity Date
------------------------- -------------
Series G
Equipment Notes: $30,516,479.41 January 25, 2008
Series C
Equipment Notes: $ 9,901,472.19 January 25, 2008
Series D
Equipment Notes: $ 5,606,724.64 January 25, 2008
Schedule I-1
CERTAIN DEFINED TERMS
DEFINED TERM DEFINITION
------------ ----------
Debt Rate for Series G Equipment Notes: With respect to (i) the first Interest
Period 2.09% per annum and (ii) any
subsequent Interest Period, LIBOR for such
Interest Period as determined pursuant to
the Reference Agency Agreement plus the
Applicable Margin for Series G Equipment
Notes.
Debt Rate for Series C Equipment Notes: With respect to (i) the first Interest
Period 3.34% per annum and (ii) any
subsequent Interest Period, LIBOR for such
Interest Period as determined pursuant to
the Reference Agency Agreement plus the
Applicable Margin for Series C Equipment
Notes.
Debt Rate for Series D Equipment Notes: With respect to (i) the first Interest
Period 3.84% per annum and (ii) any
subsequent Interest Period, LIBOR for such
Interest Period as determined pursuant to
the Reference Agency Agreement plus the
Applicable Margin for Series D Equipment
Notes.
Applicable Margin: In the case of Series G Equipment Notes,
0.75% per annum, as such margin may be
adjusted as necessary for the period and in
the circumstances specified in Section 2(d)
of the Registration Rights Agreement; in
the case of Series C Equipment Notes, 2.00%
per annum; and in the case of Series D
Equipment Notes, 2.50% per annum.
Make-Whole Amount: In the case of the prepayment of the unpaid
principal amount of Series G Equipment
Notes, an amount equal to the following
percentage of the principal amount of
Series G Equipment Notes prepaid:
Schedule I-2
IF REDEEMED DURING
THE YEAR PRIOR TO
THE ANNIVERSARY OF
THE ISSUANCE DATE MAKE-WHOLE
INDICATED BELOW AMOUNT
------------------ ----------
1st 1.50%
2nd 1.00%
3rd 0.50%
Schedule I-3
EQUIPMENT NOTES AMORTIZATION
SERIES G EQUIPMENT NOTES
Percentage of
-------------
Original Principal Amount
-------------------------
Payment Date to be Paid
------------ ----------
The portion of this Schedule appearing below this text is intentionally deleted
from the FAA filing counterpart because the parties hereto deem it to contain
confidential information.
[Intentionally Omitted]
Schedule I-1
EQUIPMENT NOTES AMORTIZATION
SERIES D EQUIPMENT NOTES
Percentage of
-------------
Original Principal Amount
-------------------------
Payment Date to be Paid
------------ ----------
The portion of this Schedule appearing below this text is intentionally deleted
from the FAA filing counterpart because the parties hereto deem it to contain
confidential information.
[Intentionally Omitted]
Schedule I-2
SCHEDULE II
to INDENTURE AND
SECURITY AGREEMENT
PASS THROUGH TRUST AGREEMENT AND
PASS THROUGH TRUST SUPPLEMENTS
Pass Through Trust Agreement, dated as of November 16, 2000, between Delta Air
Lines, Inc. and U.S. Bank Trust National Association (as successor to State
Street Bank and Trust Company of Connecticut, National Association), as trustee,
as supplemented by Trust Supplement No. 2003-1G, dated as of January 30, 2003,
Trust Supplement No. 2003-1C, dated as of January 30, 2003 and Trust Supplement
No. 2003-1D, dated as of January 30, 2003.
Schedule II-1
