-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PVdo63FOQosCNeEqLs9nLzq+gkm+fiZM8e9tRCrcYqzd7J2sK9na/9/HnJvu5Ydj 8vvaC+bDSBwehdlmFmGjdw== 0000950144-03-008467.txt : 20030711 0000950144-03-008467.hdr.sgml : 20030711 20030710202407 ACCESSION NUMBER: 0000950144-03-008467 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 25 FILED AS OF DATE: 20030711 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELTA AIR LINES INC /DE/ CENTRAL INDEX KEY: 0000027904 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 580218548 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 333-106952 FILM NUMBER: 03782782 BUSINESS ADDRESS: STREET 1: HARTSFIELD ATLANTA INTL AIRPORT STREET 2: 1030 DELTA BLVD CITY: ATLANTA STATE: GA ZIP: 30354-1989 BUSINESS PHONE: 4047152600 MAIL ADDRESS: STREET 1: P.O. BOX 20706 STREET 2: DEPT 981 CITY: ATLANTA STATE: GA ZIP: 30320-6001 FORMER COMPANY: FORMER CONFORMED NAME: DELTA AIR CORP DATE OF NAME CHANGE: 19660908 S-4 1 g83137sv4.txt DELTA AIR LINES, INC. AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 2003 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- DELTA AIR LINES, INC. (Exact name of Registrant as specified in its charter) DELAWARE 4512 58-0218548 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
HARTSFIELD ATLANTA INTERNATIONAL AIRPORT ATLANTA, GEORGIA 30320 (404) 715-2600 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) COPIES OF ALL COMMUNICATIONS TO: ROBERT S. HARLEY, ESQ. RICHARD A. ABORN, ESQ. SENIOR VICE PRESIDENT-GENERAL COUNSEL CADWALADER, WICKERSHAM & TAFT LLP AND SECRETARY 100 MAIDEN LANE DELTA AIR LINES, INC. NEW YORK, NEW YORK 10038 HARTSFIELD ATLANTA INTERNATIONAL AIRPORT (212) 504-6000 ATLANTA, GEORGIA 30320 (404) 715-2387
(Name, address, including zip code, and telephone number, including area code, of agent for service) --------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practical after this Registration Statement becomes effective. If the Securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] --------------------- CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ PROPOSED PROPOSED MAXIMUM MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE AGGREGATE AMOUNT OF SECURITIES BEING REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE REGISTRATION FEE(1) - ------------------------------------------------------------------------------------------------------------------ Pass Through Certificates, Series 2003-1G.................. $391,583,000 100% $391,583,000 $31,679.06 - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------
(1) Pursuant to Rule 457(f)(2), the registration fee has been calculated using the book value of the securities being registered. -------------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE CERTIFICATES OR ACCEPT AN OFFER TO BUY THESE CERTIFICATES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. Subject to Completion, Dated July 10, 2003 $391,583,000 (Delta Air Lines Logo) Offer to Exchange CLASS G PASS THROUGH CERTIFICATES, SERIES 2003-1, Which have been registered under the Securities Act of 1933, For any and all outstanding Class G Pass Through Certificates, Series 2003-1 ------------------------ The New Class G Certificates - - The terms of the new Class G pass through certificates we are issuing will be substantially identical to the terms of the outstanding Class G pass through certificates, except that the new Class G pass through certificates are being registered under the Securities Act of 1933, as amended, and will not contain restrictions on transfer or other provisions relating to interest rate increases, and the pass through certificates will be available only in book-entry form. - - No public market currently exists for the Class G pass through certificates. The Exchange Offer - - the exchange offer expires at 5:00 p.m., New York City time, on , 2003, unless we extend it. (AMBAC LOGO) The New Class G Certificates will not be listed on any national securities exchange. THE CERTIFICATES AND THE EXCHANGE OFFER INVOLVE RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE . ------------------------
FINAL EXPECTED CERTIFICATES FACE AMOUNT INTEREST RATE DISTRIBUTION DATE - ------------ -------------- --------------------------- -------------------- Class G.............. $ 391,583,000 USD 3-month LIBOR + 0.75% January 25, 2008
- --------------- (1) Plus accrued interest, if any, from the date of issuance. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is , 2003. TABLE OF CONTENTS PROSPECTUS
PAGE ---- PRESENTATION OF INFORMATION............ iii WHERE YOU CAN FIND MORE INFORMATION.... iv SUMMARY................................ 1 The Exchange Offer................... 1 Summary of Terms of Certificates..... 5 Equipment Notes and the Aircraft..... 6 Loan to Aircraft Value Ratios........ 7 Cash Flow Structure.................. 8 The Offering......................... 9 Selected Financial and Operating Data.............................. 19 RISK FACTORS........................... 22 Risk Factors Relating to Business Environment....................... 22 Risk Factors Relating to Delta....... 23 Risk Factors Relating to the Airline Industry.......................... 25 Risk Factors Relating to the Certificates and the Exchange Offer............................. 26 Risk Factors Relating to the Policy Provider.......................... 30 Other Risk Factor.................... 30 THE EXCHANGE OFFER..................... 31 THE COMPANY............................ 39 RECENT DEVELOPMENTS.................... 39 USE OF PROCEEDS........................ 41 DESCRIPTION OF THE POLICY PROVIDER..... 41 General.............................. 41 Ambac Financial Information.......... 42 DESCRIPTION OF THE CERTIFICATES........ 44 General.............................. 44 Distribution of Payments on Equipment Notes............................. 45 Subordination........................ 47 Pool Factors......................... 47 Reports to Certificateholders........ 49 Indenture Events of Default and Certain Rights Upon an Indenture Event of Default.................. 49 Purchase Rights of Certificateholders................ 51 PTC Event of Default................. 52
PAGE ---- Merger, Consolidation and Transfer of Assets............................ 52 Modification of the Pass Through Trust Agreements and Certain Other Agreements........................ 53 Termination of the Trusts............ 56 The Trustees......................... 56 Book-Entry Registration; Delivery and Form.............................. 56 DESCRIPTION OF LIQUIDITY FACILITIES.... 59 Primary Liquidity Facility........... 59 Above-Cap Liquidity Facility......... 65 DESCRIPTION OF THE POLICY AND THE POLICY PROVIDER AGREEMENT............ 68 The Policy........................... 68 Interest Drawings.................... 68 Proceeds Deficiency Drawing.......... 68 No Proceeds Drawing.................. 68 Final Policy Drawing................. 69 Avoidance Drawing.................... 70 General.............................. 70 Definitions.......................... 71 The Policy Provider Agreement........ 71 DESCRIPTION OF THE INTERCREDITOR AGREEMENT............................ 71 Intercreditor Rights................. 72 Priority of Distributions............ 74 Voting of Equipment Notes............ 79 The Subordination Agent.............. 79 DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS........................... 80 The Aircraft......................... 80 The Appraisals....................... 80 DESCRIPTION OF THE EQUIPMENT NOTES..... 81 General.............................. 81 Subordination........................ 81 Principal and Interest Payments...... 82 Determination of LIBOR............... 82 Redemption........................... 83 Security............................. 85
PAGE ---- Loan to Value Ratios of Equipment Notes............................. 86 Limitation of Liability.............. 86 Indenture Events of Default, Notice and Waiver........................ 86 Remedies............................. 87 Modification of Indentures........... 89 Indemnification...................... 89 Certain Provisions of the Indentures........................ 90 CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES......................... 94 CERTAIN ERISA CONSIDERATIONS........... 95 General.............................. 95 Plan Assets Issues................... 95
PAGE ---- Prohibited Transaction Exemptions.... 95 Special Considerations Applicable to Insurance Company General Accounts.......................... 96 PLAN OF DISTRIBUTION................... 96 LEGAL OPINIONS......................... 97 EXPERTS................................ 97 APPRAISERS............................. 98 INDEX OF DEFINED TERMS.............Appendix I APPRAISAL LETTERS.................Appendix II EQUIPMENT NOTE PRINCIPAL PAYMENTS....Appendix III LOAN TO VALUE RATIOS OF EQUIPMENT NOTES.................Appendix IV
--------------------- ii PRESENTATION OF INFORMATION We have given certain capitalized terms specific meanings for purposes of this Prospectus (the "Prospectus"). The Index of Defined Terms attached as Appendix I to this Prospectus lists the page in this Prospectus on which we have defined each such term. At varying places in this Prospectus, we refer you to other sections for additional information by indicating the caption heading of such other sections. The page on which each principal caption included in this Prospectus can be found is listed in the foregoing Table of Contents. This Prospectus contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") which represent Delta's expectations or beliefs concerning future events. When used in this Prospectus, and in documents incorporated by reference, the words "expects," "plans," "anticipates" and similar expressions are intended to identify forward-looking statements. All forward-looking statements in this Prospectus are based upon information available to us on the date of this Prospectus. We undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our expectations. Additional information concerning these and other factors is contained in our SEC filings, including but not limited to Delta's Forms 10-K, 10-Q and 8-K. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. THIS DOCUMENT MAY BE USED ONLY WHERE IT IS LEGAL TO SELL THESE SECURITIES. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THIS PROSPECTUS. ALSO, YOU SHOULD NOT ASSUME THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF DELTA SINCE THE DATE OF THIS PROSPECTUS. iii WHERE YOU CAN FIND MORE INFORMATION This Prospectus constitutes a part of a registration statement on Form S-4 (together with all amendments, exhibits and appendices, the "Registration Statement") filed by Delta Air Lines, Inc. ("Delta") with the Securities and Exchange Commission (the "Commission") under the Securities Act. This Prospectus does not contain all of the information included in the Registration Statement, the exhibits and certain other parts of which are omitted in accordance with the rules and regulations of the Commission. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete, and you should review the full texts of those contracts and other documents. Delta files annual, quarterly and special reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the "SEC"). You may read and copy any document filed by Delta at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Delta's SEC filings are also available to the public over the internet at http://www.sec.gov. We incorporate by reference the documents listed below and any filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until the termination of the Exchange Offer: - Annual Report on Form 10-K for the fiscal year ended December 31, 2002. - Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 and the Current Reports on Form 8-K filed on April 23, 2003, May 27, 2003 and June 2, 2003. The information incorporated by reference is considered to be a part of this Prospectus, and information that we file later with the SEC will automatically update and supersede this information. Any party to whom this Prospectus is delivered may request a copy of these filings (other than any exhibits unless specifically incorporated by reference into this Prospectus), at no cost, by writing or telephoning Delta at Delta Air Lines, Inc., Investor Relations, Dept. No. 829, P.O. Box 20706, Atlanta, GA 30320, telephone no. (404) 715-2600. iv SUMMARY The following is a summary and does not contain all of the information that may be important to you. You should read the more detailed information and consolidated financial statements incorporated by reference in this Prospectus, as well as the materials filed by Delta with the SEC that are considered to be part of this Prospectus. See "Where You Can Find More Information" in this Prospectus. Unless otherwise indicated, "we," "us," "our" and similar terms, as well as references to "Delta," refer to Delta Air Lines, Inc. THE EXCHANGE OFFER The Certificates.............. On January 30, 2003 we issued and privately placed $391,583,000 aggregate principal amount of Class G, Pass Through Certificates, Series 2003-1 pursuant to exemptions from the registration requirements of the Securities Act. On April 25, 2003, principal payments on the Series G Equipment Notes reduced the amounts of such Certificates outstanding to $386,844,695. Principal payments in the amount of approximately $5,055,600 are due on July 25, 2003. The "Initial Purchasers" of the Class G Certificates were Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Lyonnais Securities (USA) Inc., Deutsche Bank Securities Inc., ING Financial Markets LLC, J.P. Morgan Securities Inc., Salomon Smith Barney Inc. and U.S. Bancorp Piper Jaffray Inc. The Class C and D Certificates.................. In addition, on January 30, 2003, we issued $135,423,000 aggregate principal amount of Class C Pass Through Certificates, Series 2003-1 and $65,392,000 aggregate principal amount of Class D Pass Through Certificates, Series 2003-1. The Class C and Class D Certificates were privately placed with affiliates of Delta concurrently with the issuance of the Class G Certificates. The Exchange Offer does not apply to the Class C and Class D Certificates. When we use the term "Old Class G Certificates" in this Prospectus, we mean the Class G Certificates, Series 2003-1, which were privately placed with the Initial Purchasers on January 30, 2003 and were not registered with the Commission. When we use the term "New Class G Certificates" in this Prospectus, we mean the Class G Certificates registered with the Commission and offered hereby in exchange for the Old Class G Certificates. When we use the term "Class G Certificates" in this Prospectus, the related discussion applies to both the Old Class G Certificates and the New Class G Certificates. When we use the term "Certificates" in this Prospectus, the related discussion applies to the Class G, Class C and Class D Certificates. Registration Rights Agreement..................... On January 30, 2003, we entered into a Registration Rights Agreement with the Initial Purchasers and the Trustee providing, among other things, for the Exchange Offer. 1 The Exchange Offer............ We are offering New Class G Certificates in exchange for an equal principal amount of Old Class G Certificates. The New Class G Certificates will be issued to satisfy our obligations under the Registration Rights Agreement. The New Class G Certificates will be entitled to the benefits of and will be governed by the same Pass Through Trust Agreement that governs the Old Class G Certificates. The form and terms of the New Class G Certificates are the same in all material respects as the form and terms of the Old Class G Certificates, except that we registered the New Class G Certificates under the Securities Act so their transfer is not restricted like the Old Class G Certificates, the New Class G Certificates do not contain terms with respect to transfer restrictions or interest rate increases and the New Class G Certificates will be available only in book-entry form. As of the date of this Prospectus, $391,583,000 face amount ($386,844,695 Pool Balance) of Old Class G Certificates are outstanding. Principal payments in the amount of approximately $5,055,600 are due on July 25, 2003. Conditions to the Exchange Offer......................... The Exchange Offer is not conditioned upon any minimum principal amount of Old Class G Certificates being tendered for exchange. However, the Exchange Offer is subject to certain customary conditions, which may be waived by us. See "The Exchange Offer -- Conditions". Procedures for Tendering Old Class G Certificates.......... If you wish to accept the Exchange Offer you must deliver your Old Class G Certificates to the Exchange Agent for exchange no later than 5:00 p.m., New York City time, on , 2003. The Expiration Date may be extended under certain circumstances. You must also deliver a completed and signed letter of transmittal together with the Old Class G Certificates (the "Letter of Transmittal"). A Letter of Transmittal has been sent to Certificateholders and a form can be found as an exhibit to the Registration Statement. Please refer to "The Exchange Offer -- Procedures for Tendering". You must deliver the Old Class G Certificates and the Letter of Transmittal to U.S. Bank Trust National Association (the "Exchange Agent"), as follows: U.S. Bank Trust National Association c/o U.S. Bank Corporate Trust Services 180 East Fifth Street St. Paul, MN 55101 Attn: Specialized Finance Telephone: (651) 244-1537 Facsimile: (800) 934-6802 If you hold Old Class G Certificates through DTC and wish to accept the Exchange Offer, you may do so through DTC's Automated Tender Offer Program. By accepting the Exchange 2 Offer through such program, you will agree to be bound by the Letter of Transmittal as though you had signed the Letter of Transmittal and delivered it to the Exchange Agent. See "The Exchange Offer -- Procedures for Tendering", "-- Book-Entry Transfer" and "-- Exchange Agent". Guaranteed Delivery Procedures.................... If you wish to tender Old Class G Certificates and your Old Class G Certificates are not immediately available or you cannot deliver your Old Class G Certificates and a properly completed Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date or you cannot complete the book-entry transfer procedures prior to the Expiration Date, you may tender your Old Class G Certificates according to the guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery Procedures". Denominations................. You may only tender Old Class G Certificates in integral multiples of $100,000. The New Class G Certificates will be issued in integral multiples of $1,000. Withdrawal Rights............. You may withdraw a tender of Old Class G Certificates at any time before 5:00 p.m., New York City time, on the Expiration Date. To withdraw a tender of Old Class G Certificates, the Exchange Agent must receive a written or facsimile transmission notice requesting such withdrawal at its address set forth under "The Exchange Offer -- Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration Date. See "The Exchange Offer -- Withdrawal of Tenders". Resale of New Class G Certificates.................. We believe that you can offer for resale, resell and otherwise transfer the New Class G Certificates without complying with the registration and prospectus delivery requirements of the Securities Act if: - you acquire the New Class G Certificates in the ordinary course of your business; - you have no arrangements or understanding with any person to participate in the distribution of the New Class G Certificates; and - you are not an "affiliate", as defined in Rule 405 of the Securities Act, of ours or of any Trustee or a broker-dealer who acquired Old Class G Certificates directly from the Trustee for your own account. If any of these conditions is not satisfied and you transfer any New Class G Certificate without delivering a proper prospectus or without qualifying for a registration exemption, you may incur liability under the Securities Act. We do not assume or indemnify you against such liability. Each broker-dealer that receives New Class G Certificates in exchange for Old Class G Certificates held for its own account as a result of market-making or other trading activities must acknowledge that it will deliver a prospectus in connection with 3 any resale of such New Class G Certificates. A broker-dealer may use this Prospectus for an offer to resell, resale or other transfer of such New Class G Certificates issued to it in the Exchange Offer. For more information on the resale of New Class G Certificates, see "The Exchange Offer -- General". Registration, Clearance and Settlement.................... The New Class G Certificates will be represented by one or more permanent global certificates, which will be registered in the name of the nominee of DTC. The global certificates will be deposited with the Trustee as custodian for DTC. See "Description of the Certificates -- Book Entry; Delivery and Form". Delivery of New Class G Certificates.................. The Exchange Agent will deliver New Class G Certificates in exchange for all properly tendered Old Class G Certificates promptly following the expiration of the Exchange Offer. Certain Federal Income Tax Consequences.................. The exchange of New Class G Certificates for Old Class G Certificates will not be treated as a taxable event for federal income tax purposes. See "Certain U.S. Federal Income Tax Consequences". Fees and Expenses............. We will pay all expenses, other than certain applicable taxes, of completing the Exchange Offer and compliance with the Registration Rights Agreement. See "The Exchange Offer -- Fees and Expenses". Failure to Exchange Old Class G Certificates................ Once the Exchange Offer has been completed, if you do not exchange your Old Class G Certificates for New Class G Certificates in the Exchange Offer, you will no longer be entitled to registration rights and will not be able to offer or sell your Old Class G Certificates, unless (i) such Old Class G Certificates are subsequently registered under the Securities Act (which, subject to certain exceptions set forth in the Registration Rights Agreement, we will have no obligation to do) or (ii) your transaction is exempt from, or otherwise not subject to, the Securities Act and applicable state securities laws. See "Risk Factors -- Risk Factors Relating to the Certificates and the Exchange Offer -- Consequences of Failure to Exchange" and "The Exchange Offer". Use of Proceeds............... We will not receive any cash proceeds from the exchange of the New Class G Certificates for the Old Class G Certificates. 4 SUMMARY OF TERMS OF CERTIFICATES
CLASS G CLASS C(1) CLASS D(1) CERTIFICATES CERTIFICATES CERTIFICATES ---------------------- ---------------------- ---------------------- Aggregate face amount at the Issuance Date....... $391,583,000 $135,423,000 $65,392,000 Ratings: Moody's................... Aaa Not Rated Not Rated Standard & Poor's......... AAA Not Rated Not Rated Initial loan to Aircraft value ratio at the Issuance Date (cumulative)(2)......... 49.0% 65.9% 74.1% Expected maximum loan to Aircraft value ratio (cumulative)............ 49.0% 65.9% 74.1% Expected principal distribution window (in years)(3)............... 0.2 - 5.0 5.0 0.2 - 5.0 Initial average life (in years)(3)............... 4.2 5.0 2.5 Regular Distribution Dates................... January 25, April 25, January 25, April 25, January 25, April 25, July 25 and October 25 July 25 and October 25 July 25 and October 25 Final Expected Distribution Date....... January 25, 2008 January 25, 2008 January 25, 2008 Final Legal Distribution Date.................... July 25, 2009 January 25, 2008 January 25, 2008 Minimum Denomination...... $100,000 $100,000 $100,000 Section 1110 Protection... Yes Yes Yes Liquidity Facility Coverage................ 6 quarterly interest No No payments Policy Coverage(4)........ Yes No No
- --------------- (1) The Class C and Class D Certificates are not being offered pursuant to this Prospectus. The Class C and Class D Certificates were purchased by affiliates of Delta concurrently with the issuance of the Old Class G Certificates. (2) These percentages are calculated as of the Issuance Date. The aggregate appraised base value of the Aircraft was $799,560,000 as of such date. See "Loan to Aircraft Value Ratios" in this Prospectus summary for the method we used in calculating the loan to Aircraft value ratios. (3) Measured from the Issuance Date. (4) The Policy will support the payment of interest on the Class G Certificates when due (after taking into account the prior use of any available funds under the Primary Liquidity Facility, the Primary Cash Collateral Account, and the Above-Cap Account) and the payment of the outstanding balance of the Class G Certificates on the Final Legal Distribution Date for the Class G Certificates and in certain other circumstances as described herein. 5 EQUIPMENT NOTES AND THE AIRCRAFT The Trusts hold secured Equipment Notes issued for each of twelve Boeing Aircraft, consisting of two Boeing 737-832 aircraft and ten Boeing 767-332ER aircraft. All of the Aircraft have been delivered to and are being operated by Delta. See "Description of the Aircraft and the Appraisals" for a description of the Aircraft. Set forth below is information about the Aircraft and the Equipment Notes for those Aircraft.
PRINCIPAL AMOUNT OF MANUFACTURER'S REGISTRATION DATE APPRAISED BASE SERIES G, C AND D AIRCRAFT TYPE SERIAL NUMBER NUMBER DELIVERED VALUE(1) EQUIPMENT NOTES - ------------- -------------- ------------ --------- -------------- ------------------- Boeing 737-832........ 30816 N3760C 12/21/01 $40,950,000 $33,126,206 Boeing 737-832........ 29628 N3761R 12/20/01 40,950,000 33,126,206 Boeing 767-332ER...... 28450 N193DN 8/21/97 66,930,000 45,441,495 Boeing 767-332ER...... 28451 N194DN 9/26/97 67,140,000 46,024,676 Boeing 767-332ER...... 28452 N195DN 9/30/97 67,140,000 46,024,676 Boeing 767-332ER...... 28453 N196DN 10/30/97 67,333,333 46,191,555 Boeing 767-332ER...... 28454 N197DN 12/23/97 67,690,000 46,476,358 Boeing 767-332ER...... 28455 N198DN 2/2/98 68,630,000 49,661,399 Boeing 767-332ER...... 30595 N1611B 5/15/00 76,203,333 59,007,653 Boeing 767-332ER...... 30596 N178DZ 5/23/00 76,203,333 59,007,653 Boeing 767-332ER...... 30575 N1612T 5/26/01 79,900,000 63,850,820 Boeing 767-332ER...... 32776 N1613B 8/10/01 80,490,000 64,459,302
- --------------- (1) The appraised base value of each Aircraft set forth above is the lesser of the average and median appraised base value of such Aircraft as appraised by three independent appraisal and consulting firms. The appraisers based their appraisals on varying assumptions (which may not reflect current market conditions) and methodologies. See "Description of the Aircraft and the Appraisals -- The Appraisals." An appraisal is only an estimate of value and you should not rely on any appraisal as a measure of realizable value. In its appraisal letter, one of the appraisers points out that, as a result of the events of September 11, 2001, there has been a significant negative effect on the current market values of all commercial aircraft and that the present used aircraft market is considered to be a distressed market. See "Risk Factors -- Risks Factors Relating to the Certificates and the Exchange Offer -- Appraisals and Realizable Value of Aircraft." 6 LOAN TO AIRCRAFT VALUE RATIOS The following table provides loan to Aircraft value ratios ("LTVs") for each Class of Certificates as of the Issuance Date and each January 25 Regular Distribution Date. The table is not a forecast or prediction of expected or likely LTVs, but a mathematical calculation based upon one set of assumptions. See "Risk Factors -- Risks Factors Relating to the Certificates and the Exchange Offer -- Appraisals and Realizable Value of Aircraft." We compiled the following table on an aggregate basis. However, the Equipment Notes issued under an Indenture are entitled only to certain specified cross-collateralization provisions as described under "Description of the Equipment Notes -- Security." The relevant LTVs in a default situation for the Equipment Notes issued under a particular Indenture would depend on various factors, including the extent to which the debtor or trustee in bankruptcy agrees to perform Delta's obligations under the Indentures. Therefore, the following aggregate LTVs are presented for illustrative purposes only and should not be interpreted as indicating the degree of cross-collateralization available to the holders of the Certificates.
AGGREGATE POOL BALANCE(2) LTV(3) ASSUMED ------------------------------------------ ------------------------------------------ AIRCRAFT CLASS G CLASS C CLASS D CLASS G CLASS C CLASS D DATE VALUE(1) CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES - ---- ------------ ------------ ------------ ------------ ------------ ------------ ------------ January 30, 2003 $799,560,000 $391,583,000 $135,423,000 $65,392,000 49.0% 65.9% 74.1% January 25, 2004 772,913,158 366,524,319 135,423,000 50,838,771 47.4 64.9 71.5 January 25, 2005 746,266,316 337,405,695 135,423,000 36,279,570 45.2 63.4 68.2 January 25, 2006 719,619,475 311,162,153 135,423,000 23,157,900 43.2 62.1 65.3 January 25, 2007 692,972,633 282,937,999 135,423,000 9,045,931 40.8 60.4 61.7 January 25, 2008 0 0 0 0 NA NA NA
- --------------- (1) In calculating the aggregate Assumed Aircraft Value, we assumed that the appraised base value of each Aircraft determined as described under "Equipment Notes and the Aircraft" declines in accordance with the Depreciation Assumption described under "Description of the Equipment Notes -- Loan to Value Ratio of the Equipment Notes." Other rates or methods of depreciation may result in materially different LTVs. We cannot assure you that the depreciation rate and method assumed for purposes of the table are the ones most likely to occur or predict the actual future value of any Aircraft. See "Risk Factors -- Risks Factors Relating to the Certificates and the Exchange Offer -- Appraisals and Realizable Value of Aircraft." (2) The "pool balance" for each Class of Certificates indicates, as of any date, after giving effect to any principal distributions expected to be made on such date, the portion of the original face amount of such Class of Certificates that has not been distributed to Certificateholders. (3) We obtained the LTVs for each Class of Certificates for each January 25 Regular Distribution Date by dividing (i) the expected outstanding pool balance of such Class together with the expected outstanding pool balance of all other Classes ranking senior in right to distributions to such Class after giving effect to the distributions expected to be made on such date, by (ii) the aggregate Assumed Aircraft Value of the Aircraft on such date based on the assumptions described above. 7 CASH FLOW STRUCTURE This diagram illustrates the structure for the offering of the Certificates and cash flows. (Cash Flow Structure Chart) - ------------------------------ (1) Delta issued Series G, Series C and Series D Equipment Notes in respect of each Aircraft. The Class C and Class D Certificates are not offered under this Prospectus. The Equipment Notes with respect to each Aircraft were issued under a separate Indenture. The only cross-default provision in the Indentures is an event of default under each Indenture which occurs if all amounts owing under any Equipment Note are not paid in full on the Final Payment Date. (2) The primary liquidity facility and the above-cap liquidity facility are available with respect to the Class G Certificates and are expected to cover up to six consecutive quarterly interest distributions on the Class G Certificates. There will be no liquidity facility in respect of the Class C and Class D Certificates. (3) The Policy covers payment of interest on and the outstanding balance of the Class G Certificates only in the circumstances described herein. See "Description of the Policy and the Policy Provider Agreement." The Policy does not cover any amounts payable in respect of the Class C or Class D Certificates. 8 THE OFFERING Trusts and Certificates....... Each of the Class G Trust, the Class C Trust and the Class D Trust were formed pursuant to a separate trust supplement entered into between Delta and U.S. Bank Trust National Association to a basic pass through trust agreement between Delta and U.S. Bank Trust National Association (as successor trustee to State Street Bank and Trust Company of Connecticut, National Association), as Trustee under each Trust. Each Class of Certificates represent fractional undivided interests in the related Trust. Certificates Offered.......... New Class G Certificates. Class C and Class D Certificates.................. We are not offering the Class C or Class D Certificates pursuant to this Prospectus. We privately placed the Class C and Class D Certificates with our affiliates concurrently with the issuance of the Old Class G Certificates. There is no liquidity facilities with respect to the Class C or Class D Certificates. Use of Proceeds............... The proceeds from the sale of the Old Class G Certificates were used to acquire the Series G Equipment Notes. The Equipment Notes are full recourse obligations of Delta. Delta used the proceeds from the issuance of the Series G Equipment Notes for general corporate purposes. Subordination Agent, Trustee and Loan Trustee.............. U.S. Bank Trust National Association. Policy Provider............... Ambac Assurance Corporation. Primary Liquidity Provider.... Initially, Landesbank Baden-Wurttemberg for the Class G Certificates. There is no primary liquidity facility for the Class C or Class D Certificates. Above-Cap Liquidity Provider...................... Initially, Merrill Lynch Capital Services, Inc. for the Class G Certificates. There is no above-cap liquidity facility for the Class C or Class D Certificates. The obligations of Merrill Lynch Capital Services, Inc. under the Above-Cap Liquidity Facility are guaranteed by its parent company, Merrill Lynch & Co., Inc. Trust Property................ The property of each Trust includes: - Equipment Notes acquired by such Trust; - All rights of such Trust under the Intercreditor Agreement (including all monies receivable pursuant to such rights); - With respect to the Class G Trust, all monies receivable under the Liquidity Facilities; - With respect to the Class G Trust, all monies receivable under the Policy; and - Funds from time to time deposited with the Trustee in accounts relating to such Trust. Regular Distribution Dates.... January 25, April 25, July 25 and October 25 of each year, commencing on April 25, 2003. 9 Record Dates.................. The fifteenth day preceding the related Distribution Date. Distributions................. The Trustee will distribute all payments of principal, Break Amount (if any), Make-Whole Amount (if any) and interest received on the Equipment Notes held in each Trust to the holders of the Certificates of such Trust, subject to the subordination provisions applicable to the Certificates. Subject to the subordination provisions applicable to the Certificates, - scheduled payments of principal and interest made on the Equipment Notes will be distributed on the applicable Regular Distribution Dates; and - payments of principal, Break Amount (if any), Make-Whole Amount (if any) and interest made on the Equipment Notes resulting from any early redemption of such Equipment Notes will be distributed on a Special Distribution Date after not less than 15 days' notice to Certificateholders. Intercreditor Agreement....... The Trusts, the Primary Liquidity Provider, the Above-Cap Liquidity Provider, the Subordination Agent and the Policy Provider are parties to the Intercreditor Agreement. The Intercreditor Agreement states how payments made on the Equipment Notes, the Primary Liquidity Facility, the Above-Cap Liquidity Facility and the Policy will be distributed. The Intercreditor Agreement also sets forth agreements among the Trusts, the Liquidity Providers and the Policy Provider relating to who will control the exercise of remedies under the Equipment Notes and the Indentures. Subordination................. Under the Intercreditor Agreement, distributions on the Certificates generally will be made in the following order: - First, to the holders of the Class G Certificates; - Second, to the holders of the Class C Certificates; and - Third, to the holders of the Class D Certificates. Certain payments to the Primary Liquidity Provider and to the Policy Provider will be made prior to payments on the Certificates as discussed under "Description of the Intercreditor Agreement -- Priority of Distributions." If Delta is in bankruptcy or other specified defaults have occurred but Delta is continuing to meet certain of its payment obligations, the subordination provisions applicable to the Certificates permit distributions to be made on junior Certificates prior to making distributions in full on the more senior Certificates. Control of Loan Trustee....... Subject to certain conditions, the "Controlling Party" will be entitled to direct the Loan Trustee under such Indenture in taking action (including in exercising remedies, such as accelerating such Equipment Notes or foreclosing the lien on the Aircraft securing such Equipment Notes). 10 Subject to the following two paragraphs, if Final Distributions have not been fully paid to the holders of the Class G Certificates or if any obligations payable to the Policy Provider under the Intercreditor Agreement remain outstanding, so long as no Policy Provider Default has occurred and is continuing, the Policy Provider will be the "Controlling Party". At any other time the "Controlling Party" will be: - if Final Distributions have not been fully paid to holders of the Class G Certificates, the Class G Trustee; - if Final Distributions have been fully paid to the holders of the Class G Certificates, but not to the holders of the Class C Certificates, the Class C Trustee; and - if Final Distributions have been fully paid to the holders of the Class C Certificates, the Class D Trustee. Under certain circumstances, and notwithstanding the foregoing, the Primary Liquidity Provider will be the Controlling Party, unless the Policy Provider pays to the Primary Liquidity Provider all outstanding drawings and interest thereon owing to the Primary Liquidity Provider under the Primary Liquidity Facility, in which case the Policy Provider will be the Controlling Party (so long as no Policy Provider Default has occurred and is continuing). In exercising remedies during the nine months after the earlier of (a) the acceleration of the Equipment Notes issued pursuant to any Indenture or (b) the bankruptcy of Delta, the Controlling Party may not, without the consent of each Trustee (other than the Trustee of any Trust all of the Certificates of which are held or beneficially owned by Delta or any of its affiliates), direct the sale of such Equipment Notes or the Aircraft subject to the lien of such Indenture for less than certain specified minimums. Right to Buy Other Classes of Certificates.................. If Delta is in bankruptcy or certain other specified events have occurred, the Certificateholders and the Policy Provider may have the right to buy certain other Classes of Certificates on the following basis: - The Class C Certificateholders (other than Delta or any of its affiliates) will have the right to purchase all, but not less than all, of the Class G Certificates, unless the Policy Provider has elected to purchase the Class G Certificates as described below. - The Class D Certificateholders (other than Delta or any of its affiliates) will have the right to purchase all, but not less than all, of the Class G and Class C Certificates unless the Policy Provider has elected to purchase the Class G Certificates as described below. - Whether or not any Class of Certificateholders has purchased or elected to purchase the Class G Certificates, the Policy Provider (except in the event of a Policy Provider Default), if 11 it is then the Controlling Party, will have the right to purchase all, but not less than all, of the Class G Certificates. Once the Policy Provider has purchased the Class G Certificates, the Class C Certificateholders and Class D Certificateholders will no longer have the right to purchase the Class G Certificates. The purchase price in each case described above will be the outstanding principal balance of the applicable Class of Certificates plus accrued and undistributed interest, plus Break Amount (if any), but without any Make-Whole Amount. Liquidity Facilities.......... Under the Primary Liquidity Facility, the Primary Liquidity Provider will, if necessary, make advances in an aggregate amount that, together with amounts payable by the Above-Cap Liquidity Provider under the Above-Cap Liquidity Facility, is expected to be sufficient to pay interest distributions on the Class G Certificates on up to six successive quarterly Regular Distribution Dates at the applicable interest rate for the Class G Certificates. Payments under the Primary Liquidity Facility and the Above-Cap Liquidity Facility cannot be used to pay any other amount in respect of the Certificates. Notwithstanding the subordination provisions applicable to the Certificates, the holders of the Class G Certificates will be entitled to receive and retain the proceeds of drawings under the Primary Liquidity Facility and withdrawals from the account into which payments under the Above-Cap Liquidity Facility are required to be made for the Class G Trust. Upon each drawing under the Primary Liquidity Facility to pay interest distributions on the Class G Certificates, the Subordination Agent will be obligated to reimburse the Primary Liquidity Provider for the amount of such drawing, together with interest on such drawing. Such reimbursement obligation and all interest, fees and other amounts owing to the Primary Liquidity Provider under the Primary Liquidity Facility will rank senior to all of the Certificates in right of payment. Policy Coverage............... Under the Policy, the Policy Provider will honor drawings to cover: - any shortfall (after the application of drawings under the Primary Liquidity Facility, and withdrawals from the Primary Cash Collateral Account and the Above-Cap Account (collectively, "Prior Funds")), on any Regular Distribution Date in interest on the Class G Certificates; and - any shortfall (after giving effect to the application of Prior Funds) on the Final Legal Distribution Date in the Final Distribution (other than any unpaid Make-Whole Amount and unpaid Break Amount) on the Class G Certificates. 12 Further, upon a default in the payment of principal of a Series G Equipment Note or if a Series G Equipment Note is accelerated (a "Defaulted Series G Equipment Note") then, - on the first Business Day which is 21 months after the last Regular Distribution Date on which full payment was made on that Defaulted Series G Equipment Note prior to such default or acceleration, the Policy Provider will pay the outstanding amount of principal and accrued and unpaid interest on that Defaulted Series G Equipment Note; or - if a Defaulted Series G Equipment Note or any underlying collateral is disposed of in connection with the exercise of remedies (a "Disposition"), the Policy Provider will pay, after giving effect to the application of Disposition proceeds and any Prior Funds, the amount, if any, required to reduce the Pool Balance of the Class G Certificates by an amount equal to the outstanding principal amount of such Defaulted Series G Equipment Note (less the amount of any Policy Drawings previously paid by the Policy Provider in respect of principal of such Defaulted Series G Equipment Note) plus accrued and unpaid interest on the amount of such reduction. If there is no Disposition, instead of paying the full amount of principal and accrued and unpaid interest on a Defaulted Series G Equipment Note at the end of the 21-month period referred to above, the Policy Provider may elect, after giving five days' prior written notice to the Subordination Agent, instead to pay: - an amount equal to the scheduled principal and interest payable but not paid on the Defaulted Series G Equipment Note (without regard to the acceleration thereof) during the 21-month period (after giving effect to the application of funds received from the Primary Liquidity Facility, the Primary Cash Collateral Account and the Above-Cap Account, in each case, with respect to such interest); and - thereafter, on each Regular Distribution Date, an amount equal to the scheduled principal and interest otherwise payable on the Defaulted Series G Equipment Note (without regard to any acceleration thereof and without regard to any Prior Funds) until paid in full. Notwithstanding an election by the Policy Provider to pay scheduled payments instead of accelerated payments as discussed above, the Policy Provider may, on any Business Day (which shall be a Special Distribution Date) elected by the Policy Provider upon 20 days' notice, cause the Subordination Agent to make a drawing under the Policy for an amount equal to the then outstanding principal balance of and accrued and unpaid interest on the Defaulted Series G Equipment Note from the immediately preceding Regular Distribution Date, less any Policy Drawings previously paid by the Policy Provider in respect of principal of such Defaulted Series G Equipment Note. Further, notwithstanding an election by the Policy Provider to pay 13 scheduled payments instead of accelerated payments as discussed above, upon the occurrence of a Policy Provider Default, the Subordination Agent shall, on any Business Day elected by the Subordination Agent upon 20 days' notice to the Policy Provider, make a drawing under the Policy for an amount equal to the then outstanding principal balance of and accrued and unpaid interest on such Defaulted Series G Equipment Note from the immediately preceding Regular Distribution Date, less any Policy Drawings previously paid by the Policy Provider in respect of principal of such defaulted Series G Equipment Note. At the end of the 21-month period referred to above, the Policy Provider will honor drawings by the Primary Liquidity Provider of interest accruing on all outstanding drawings under the Primary Liquidity Facility from and after the end of such 21-month period as and when such interest becomes due in accordance with the Primary Liquidity Facility. Accrued and unpaid interest payable by the Policy Provider on account of the Defaulted Series G Equipment Notes will be calculated at the Stated Interest Rate for the Class G Certificates. The Policy will cover only the Class G Certificates and the proceeds of any Policy Drawing will be applied only to the outstanding balance of, and interest on, the Class G Certificates. The Policy Provider will be entitled to be reimbursed for Policy Drawings as described in the "Description of the Policy and the Policy Provider Agreement" and "Description of Intercreditor Agreement -- Priority of Distributions." Equipment Notes (a) Issuer.................. Under each Indenture, Delta issued Series G, Series C and Series D Equipment Notes, which were acquired, respectively, by the Class G, Class C and Class D Trusts. (b) Interest................ The Equipment Notes held in each Trust accrue interest at the rate per annum for the Certificates issued by such Trust. The rate per annum for the Class G Certificates is set forth on the cover page of this Prospectus. The Series C and Series D Equipment Notes will accrue interest at LIBOR for each Interest Period plus a margin of 2.00% and 2.50% per annum, respectively. Interest on the Equipment Notes will be payable on January 25, April 25, July 25 and October 25 of each year, commencing on April 25, 2003. Interest will be calculated on the basis of the actual number of days elapsed over a 360-day year. LIBOR will be determined from time to time by the Reference Agent as described in "Description of the Equipment Notes -- Determination of LIBOR." (c) Principal............... Principal payments on the Series G Equipment Notes are scheduled to be received in specified amounts on January 25, April 25, July 25 and October 25 in certain years, commencing on April 25, 2003 and ending on January 25, 2008. The entire principal of the Series C Equipment Notes will be payable on 14 January 25, 2008. Principal payments on the Series D Equipment Notes are scheduled to be received in specified amounts on January 25, April 25, July 25 and October 25 in certain years, commencing on April 25, 2003 and ending on January 25, 2008. (d) Rankings................ The Indentures provide for the following subordination provisions applicable to the Equipment Notes: - Series G Equipment Notes issued in respect of an Aircraft rank senior in right of payment to the Series C and Series D Equipment Notes issued in respect of such Aircraft; - Series C Equipment Notes issued in respect of an Aircraft rank junior in right of payment to the Series G Equipment Notes issued in respect of such Aircraft and rank senior in right of payment to the Series D Equipment Notes issued in respect of such Aircraft; and - Series D Equipment Notes issued in respect of an Aircraft rank junior in right of payment to the Series G and Series C Equipment Notes issued in respect of such Aircraft. By virtue of the Intercreditor Agreement, all of the Equipment Notes are effectively cross-subordinated. This means that payments received on a junior series of Equipment Notes issued in respect of one Aircraft may be applied in accordance with the priority of payment provisions set forth in the Intercreditor Agreement to make distributions on a more senior Class of Certificates. (e) Redemption.............. Aircraft Event of Loss. If an Event of Loss occurs with respect to a Core Aircraft, Delta will either: - redeem all of the Equipment Notes issued with respect to such Core Aircraft and redeem the amount of Series G Equipment Notes issued under each other Indenture relating to a Core Aircraft specified in "Description of the Equipment Notes -- Redemption", or - substitute an aircraft meeting certain requirements for such Core Aircraft. If an Event of Loss occurs with respect to a Non-Core Aircraft, Delta will either: - redeem all of the Equipment Notes issued with respect to such Non-Core Aircraft, or - substitute an aircraft meeting certain requirements for such Non-Core Aircraft. The redemption price in each case will be the unpaid principal amount of such Equipment Notes to be redeemed, together with accrued interest and Break Amount (if any), but without any Make-Whole Amount. See "Description of the Equipment Notes -- Redemption." Optional Redemption. Delta may elect to redeem at any time prior to maturity all of the Equipment Notes issued with respect 15 to a Non-Core Aircraft. The redemption price in such case will be the unpaid principal amount of such Equipment Notes, together with accrued interest and Break Amount (if any), plus the Make-Whole Amount (if any). Delta may not optionally redeem at any time any of the Equipment Notes issued with respect to a Core Aircraft. Delta may not optionally redeem any of the Equipment Notes with respect to a Non-Core Aircraft if there is a payment default under any other Indenture. See "Description of the Equipment Notes -- Redemption." The Aircraft with the following registration numbers (and any aircraft substituted therefor) are "Core Aircraft": N3760C, N3761R, N193DN, N194DN, N1611B and N178DZ. The Aircraft with the following registration numbers (and any aircraft substituted therefor) are "Non-Core Aircraft": N195DN, N196DN, N197DN, N198DN, N1612T and N1613B. Event of Default. Upon the occurrence of an Event of Default under an Indenture, any excess proceeds realized from the sale of the Aircraft or the exercise of other remedies under such Indenture will be applied to redeem the Equipment Notes under other Indentures in accordance with the third paragraph under "-- Security". (f) Security................ The Equipment Notes issued with respect to each Aircraft are secured by a security interest in such Aircraft. In addition, the Equipment Notes are cross-collateralized to the extent provided in the Indentures, as summarized below. Distribution of Excess Proceeds. The proceeds realized from the sale of an Aircraft or the exercise of other remedies by the Loan Trustee under an Indenture will be allocated, after paying certain administrative expenses and other related amounts, in the following order or priority: - to pay all amounts due and payable on all of the Equipment Notes issued under such Indenture in accordance with the priorities set forth therein; - to pay to the Loan Trustee under the other Indentures relating to the Core Aircraft an amount up to the outstanding principal of, and unpaid interest accrued on, the Series G Equipment Notes issued thereunder on a pro rata basis; - to pay to the Loan Trustee under the other Indentures relating to the Non-Core Aircraft an amount up to the outstanding principal of, and unpaid interest accrued on, the Series G Equipment Notes issued thereunder on a pro rata basis; - to pay to the Loan Trustee under the other Indentures an amount up to the outstanding principal of, and unpaid interest accrued on, the Series C Equipment Notes issued thereunder on a pro rata basis; and - to pay to the Loan Trustee under the other Indentures an amount up to the outstanding principal of, and unpaid interest 16 accrued on, the Series D Equipment Notes issued thereunder on a pro rata basis. Cross-Default at Final Payment Date. In addition, if all amounts owing under any Equipment Note are not paid in full on the Final Payment Date, the Loan Trustees will be able to exercise remedies under all remaining Indentures, including the sale of all Aircraft, to satisfy the remaining amounts due under any Equipment Note. Such payment default at the Final Payment Date is the only cross-default provision under the Indentures. Therefore, until the Final Payment Date, if the Equipment Notes issued under one or more Indentures are in default and the Equipment Notes issued under the remaining Indentures are not in default, no remedies will be exercisable under such remaining Indentures. If, at any time before the Final Payment Date, the Equipment Notes issued under an Indenture are repaid in full (other than as a result of the exercise of remedies thereunder), the lien under such Indenture will be released and will not thereafter secure any other Equipment Notes. (g) Section 1110 Protection.................... Cadwalader, Wickersham & Taft LLP, special counsel to Delta, provided an opinion to the Trustees that the benefits of Section 1110 of the Bankruptcy Code are available for each of the Aircraft. Certain ERISA Considerations................ Each person who acquires a Class G Certificate will be deemed to have represented that either: - no assets of a Plan or of any trust established with respect to a Plan shall have been used to acquire such Class G Certificate or an interest therein; or - the purchase and holding of such Class G Certificate or an interest therein by such person are exempt from the prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 or materially similar provisions of Similar Law (as defined herein) pursuant to one or more prohibited transaction statutory or administrative exemptions. See "Certain ERISA Considerations." Ratings of the Class G Certificates.................. The Class G Certificates are rated "Aaa" by Moody's and "AAA" by Standard & Poor's. A rating is not a recommendation to purchase, hold or sell Class G Certificates, and such rating does not address market price or suitability for a particular investor. There can be no assurance that such ratings will not be lowered or withdrawn by either Rating Agency. See "Risk Factors -- Risks Factors Relating to the Certificates and the Exchange Offer -- Ratings of the Certificates." The Class C and Class D Certificates are not rated. 17 Threshold Rating Requirements for the Liquidity Providers... The threshold rating is (i) a short-term unsecured debt rating of P-1 in the case of Moody's and a short-term issuer credit rating of A-1 in the case of Standard & Poor's and (ii) for any entity that does not have a short-term rating from either or both of such rating agencies, then in lieu of such short-term rating, a long-term unsecured debt rating of A1 in the case of Moody's and a long- term issuer credit rating of A+ in the case of Standard & Poor's. Primary Liquidity Provider Rating........................ The initial Primary Liquidity Provider currently meets the Threshold Rating requirement. Above-Cap Liquidity Provider Rating........................ Merrill Lynch & Co., Inc., the guarantor of the obligations of the initial Above-Cap Liquidity Provider, currently meets the Threshold Rating requirement. Rating of the Policy Provider...................... The Policy Provider is currently rated "Aaa" by Moody's and "AAA" by Standard & Poor's. Governing Law................. The Certificates and the Equipment Notes are governed by the laws of the State of New York. 18 SELECTED FINANCIAL AND OPERATING DATA The following table presents selected financial and operating data of Delta. We derived the annual historical financial data from Delta's audited consolidated financial statements and the notes thereto. The audited consolidated financial statements as of December 31, 2002 and 2001 and for the years ended December 31, 2002, 2001, 2000, 1999 and 1998 are incorporated by reference in this Prospectus and the selected financial and operating data should be read in conjunction with those financial statements. The consolidated financial data as of March 31, 2003 and for the three months ended March 31, 2003 and 2002 were derived from Delta's unaudited consolidated financial statements and may not be indicative of results for the year as a whole. See "Where You Can Find More Information."
THREE MONTHS ENDED MARCH 31, YEARS ENDED DECEMBER 31, ------------------ ---------------------------------------------------- 2003(1) 2002(2) 2002(3) 2001(4) 2000(5) 1999(6) 1998 ------- -------- -------- -------- -------- -------- -------- (UNAUDITED) STATEMENT OF OPERATIONS DATA (IN MILLIONS, EXCEPT PER SHARE DATA): Operating revenues........... $ 3,155 $ 3,103 $ 13,305 $ 13,879 $ 16,741 $ 14,883 $ 14,312 Operating expenses........... 3,690 3,538 14,614 15,481 15,104 13,565 12,509 Operating income (loss)...... (535) (435) (1,309) (1,602) 1,637 1,318 1,803 Interest expense, net(7)..... 161 141 610 410 257 126 66 Net income (loss) before cumulative effect of change in accounting principle.... (466) (397) (1,272) (1,216) 928 1,262 1,078 Net income (loss)............ (466) (397) (1,272) (1,216) 828 1,208 1,078 Earnings (loss) per share before cumulative effect of change in accounting principle(8): Basic...................... (3.81) (3.25) (10.44) (9.99) 7.39 9.05 7.22 Diluted.................... (3.81) (3.25) (10.44) (9.99) 7.05 8.52 6.87 Earnings (loss) per share(8): Basic...................... (3.81) (3.25) (10.44) (9.99) 6.58 8.66 7.22 Diluted.................... (3.81) (3.25) (10.44) (9.99) 6.28 8.15 6.87 OTHER DATA: Ratio of earnings (loss) to fixed charges(9)........... (1.02x) (0.90x) (0.51x) (0.51x) 2.37x 3.55x 3.45x OPERATING STATISTICS: Revenue passengers enplaned (thousands)................ 24,910 24,618 107,048 104,943 119,930 110,083 105,304 Available seat miles (millions)(10)............. 33,204 33,740 141,719 147,837 154,974 147,073 142,154 Revenue passenger miles (millions)(11)............. 22,884 23,230 102,029 101,717 112,998 106,165 103,342 Operating revenue per available seat mile........ 9.50c 9.20c 9.39c 9.39c 10.80c 10.12c 10.07c Passenger mile yield(12)..... 12.81c 12.39c 12.08c 12.74c 13.86c 13.14c 12.99c Operating cost per available seat mile.................. 11.11c 10.49c 10.31c 10.47c 9.75c 9.22c 8.80c Passenger load factor(13).... 68.92% 68.85% 71.99% 68.80% 72.91% 72.18% 72.70% Breakeven passenger load factor(14)................. 81.49% 79.26% 79.64% 77.31% 65.29% 65.37% 62.94%
19
AT DECEMBER 31, AT MARCH 31, --------------------------------------------------- 2003 2002 2001 2000 1999 1998(15) ---------------- ------- ------- ------- ------- ----------- (UNAUDITED) (UNAUDITED) BALANCE SHEET DATA (IN MILLIONS): Cash and cash equivalents......... $ 1,857 $ 1,969 $ 2,210 $ 1,364 $ 1,623 $ 618 Total assets...................... 24,465 24,720 23,605 21,931 19,942 14,727 Current liabilities............... 6,730 6,455 6,403 5,245 5,514 4,456 Long-term debt (less current maturities)(16)................. 10,197 10,074 8,279 5,797 4,144 1,524 Obligations under capital leases (less current obligations)...... 92 100 68 99 159 196 Shareowners' equity............... 505 893 3,769 5,343 4,908 4,077
- --------------- (1) Includes a $43 million pretax charge for the cost of pension and postretirement obligations for participants in Delta's 2002 workforce reduction programs; and a $20 million pretax charge for other income and expense items. (2) Includes a $40 million pretax expense for the temporary carrying costs associated with surplus pilots and grounded aircraft resulting from capacity reductions implemented in November 2001, as well as related requalification training and relocation costs for certain pilots; and a $28 million pretax charge for fair value adjustments of SFAS 133. (3) Includes a $439 million pretax charge for asset writedowns, restructuring and related items not primarily associated with changes to Delta's fleet plan and its 2002 workforce reduction programs; a $34 million pretax gain for compensation received under the Air Transportation Safety and System Stabilization Act (the "Stabilization Act"); and a $94 million net pretax charge for other income and expense items. (4) Includes a $1.1 billion pretax charge for asset writedowns, restructuring and related items primarily associated with the effects of the September 11, 2001 terrorist attacks on our business; a $634 million pretax gain from the Stabilization Act compensation; and a $186 million net pretax gain for other income and expense items. (5) Includes a $108 million pretax charge for restructuring and related items primarily associated with Delta's early retirement medical option program offered in 2000; a $151 million net pretax gain from other income and expense items; and a $164 million cumulative effect, non-cash pretax charge, resulting from our adoption of SFAS 133 on July 1, 2000. (6) Includes a $469 million pretax charge for asset writedowns; an $887 million net pretax gain from other income and expense items; and an $89 million non-cash pretax charge from the cumulative effect of a change in accounting principle resulting from our adoption of SAB 101 on January 1, 1999. (7) Includes interest income. (8) All earnings per share amounts for 1998 have been restated to reflect the two-for-one common stock split that became effective on November 2, 1998. (9) The ratio of earnings (loss) to fixed charges represents the number of times that fixed charges are covered by earnings. Earnings (loss) represents income (loss) before income taxes, excluding the cumulative effect of a change in accounting principle, plus fixed charges and distributed income of equity investees less capitalized interest and income (loss) from equity investees. Fixed charges include interest, whether expensed or capitalized; one-half of rental expense, which Delta believes is representative of the interest factor in those periods; amortization of debt costs; and preferred security dividends. Fixed charges exceeded adjusted earnings (loss) by $2.0 billion and $1.8 billion for the years ended December 31, 2002 and 2001, respectively, and $710 million and $622 million for the three months ended March 31, 2003 and 2002, respectively. 20 (10) "Available seat miles" is a measure of capacity which is calculated by multiplying the total number of seats available for transporting passengers by the total number of miles flown during a reporting period. (11) "Revenue passenger mile" represents one revenue-paying passenger transported one mile and is calculated by multiplying the number of revenue passengers by the number of miles they are flown during the period. (12) "Passenger mile yield" represents the amount of passenger revenue earned per revenue passenger mile during a reporting period. (13) "Passenger load factor" is a measure of utilized available seating capacity which is calculated by dividing revenue passenger miles by available seat miles for a reporting period. (14) "Break-even passenger load factor" represents the percentage of seats that must be occupied in order to break-even on a pre-tax income basis. (15) Effective December 31, 2000, Delta changed its fiscal year end from June 30 to December 31 and reported audited balance sheet data for December 31, 2000 and December 31, 1999. Balance sheet data as of December 31, 1998 was not required to be audited. (16) Long-term debt includes $498 million in Special Facilities Revenue Bonds issued in August 2001 by the Massachusetts Port Authority for the redevelopment and expansion of Delta's facilities in Terminal A at Boston's Logan International Airport. Delta has guaranteed the payment of debt service on these bonds. The related proceeds of the bonds may only be used for the redevelopment and expansion of Delta's facilities at Logan International Airport, and, accordingly, are reflected on Delta's consolidated balance sheets at March 31, 2003, December 31, 2002 and December 31, 2001 as a restricted investment in "other assets," as required by accounting principles generally accepted in the United States. 21 RISK FACTORS You should carefully consider the following risk factors as well as other information contained in this Prospectus. RISK FACTORS RELATING TO BUSINESS ENVIRONMENT THE TERRORIST ATTACKS IN 2001, MILITARY ACTION IN IRAQ AND OTHER WORLD EVENTS ADVERSELY AFFECTED, AND MAY CONTINUE TO ADVERSELY AFFECT, DELTA'S FINANCIAL RESULTS Since the terrorist attacks of September 11, 2001, involving commercial aircraft of other airlines, Delta and the airline industry have faced the worst financial crisis in aviation history. The airline industry has experienced substantial revenue decline and cost increases which have resulted in industry wide liquidity issues. Additionally, during the March 2003 quarter, the industry's financial results were negatively impacted by the military action in Iraq and the Severe Acute Respiratory Syndrome ("SARS") outbreak. The future impact of the events of September 11, 2001 and the ability of Delta to weather the current financial crisis will depend on a number of factors, including, but not limited to, the following: (i) general economic conditions; (ii) the adverse impact of the terrorist attacks on the demand for air travel; (iii) the change in Delta's operations and higher costs resulting from, and customer reaction to, new airline and airport security directives; (iv) the availability and cost of war and terrorism risk and other insurance for Delta; (v) the credit downgrades of Delta and other airlines by Moody's and Standard & Poor's discussed below, and the possibility of additional downgrades, to the extent it makes it more difficult and/or more costly for Delta to obtain financing; (vi) potential declines in the values of the aircraft in Delta's fleet or facilities and any related asset impairment charges; (vii) additional terrorist activity and/or war; (viii) our estimated pension funding obligations which are based on various assumptions, including actual market performance of our pension plan assets and future 30-year treasury bond yields; (ix) actions by U.S. or foreign governments, including the FAA and other regulatory agencies; and (x) the outcome of Delta's litigation. THE CREDIT RATINGS OF DELTA HAVE BEEN DOWNGRADED SINCE 2001 After September 11, 2001, the credit ratings on Delta's senior unsecured long-term debt were lowered from Baa3 to Ba2 by Moody's and Delta's issuer credit rating was lowered from BBB- to BB+ by Standard & Poor's, with concurrent downgrades of senior unsecured and various other debt by both rating agencies. In November 2001, Standard & Poor's lowered Delta's senior unsecured debt rating (but no other ratings) from BB+ to BB and in June 2002, Standard & Poor's lowered Delta's issuer credit rating from BB+ to BB, with concurrent downgrades of senior unsecured and various other Delta debt ratings. Moody's downgraded Delta's senior unsecured long-term debt rating from Ba2 to Ba3 in December 2001 with concurrent downgrades of various other Delta debt ratings. On March 28, 2003, Standard & Poor's lowered Delta's issuer credit rating from BB to BB-, and Delta's senior unsecured long-term debt rating from BB- to B. On April 10, 2003, Moody's downgraded Delta's senior implied debt rating from Ba3 to B1, and Delta's senior unsecured long-term debt rating from Ba3 to B3. On July 8, 2003, Standard & Poor's affirmed Delta's BB- issuer credit rating and removed its ratings from CreditWatch. The credit ratings of certain other airlines have been adjusted by Moody's and Standard and Poor's in the various aforementioned reviews and in other independent ratings actions. Moody's outlook on Delta's debt securities is negative and Standard & Poor's outlook on Delta's issuer credit rating remains negative. There can be no assurance that Delta's long-term debt rating will not be lowered further or withdrawn by a rating agency. Delta's current credit ratings have negatively impacted its ability to (i) issue unsecured debt, (ii) renew outstanding letters of credit that back certain of our obligations and (iii) obtain certain financial instruments that we use in our fuel hedging program. Our current credit ratings have also increased the 22 cost of our financing transactions and the amount of collateral required for certain financial instruments and insurance coverage. OUR INSURANCE COSTS HAVE INCREASED SUBSTANTIALLY AS A RESULT OF THE SEPTEMBER 11, 2001 TERRORIST ATTACKS AND FURTHER INCREASES IN INSURANCE COSTS OR REDUCTIONS IN COVERAGE COULD HAVE A MATERIAL ADVERSE IMPACT ON DELTA As a result of the terrorist attacks of September 11, 2001, aviation insurers have significantly reduced the maximum amount of insurance coverage available to commercial air carriers for liability to persons other than employees or passengers for claims resulting from acts of terrorism, war, or similar events. At the same time, they significantly increased the premiums for such coverage and for aviation insurance in general. Pursuant to authority granted in the Stabilization Act, the U.S. government has supplemented Delta's commercial war-risk insurance with a comprehensive war-risk liability policy to cover losses to passengers, third parties (ground damage) and the aircraft hull. This coverage was recently extended through August 2004. Delta expects that if the commercial insurance carriers reduce further the amount of insurance coverage available to Delta or further significantly increase the cost of aviation insurance, or if the U.S. government fails to renew the war-risk insurance that it provides, Delta's business, financial position, and results of operations could be materially adversely affected. RISK FACTORS RELATING TO DELTA DELTA CONTINUES TO EXPERIENCE SIGNIFICANT OPERATING LOSSES Delta reported a net loss of $466 million for the March 2003 quarter, or $3.81 loss per common share, compared to a net loss of $397 million for the March 2002 quarter, or $3.25 loss per common share. For the fiscal year ended December 31, 2002, Delta reported a net loss of $1.3 billion, or $10.44 loss per common share, compared to a net loss of $1.2 billion, or $9.99 loss per common share, for the fiscal year ended December 31, 2001. Delta's March 2003 quarter operating revenues increased 2% compared to the March 2002 quarter, while operating expenses increased 4% compared to the same period a year ago. Delta estimates that its net loss for the June 2003 quarter will be substantially greater than Delta's net loss in the June 2002 quarter. This estimate excludes the $398.3 million of payments that we received from the U.S. government under the Emergency Wartime Supplemental Appropriations Act (the "Appropriations Act"). Delta does not expect significant improvement in the revenue environment through 2003 and also expects significant cost pressures related to increases in pension and interest expense to continue. As a result, Delta expects to report a net loss for 2003 including the $398.3 million of payments received under the Appropriations Act. SIGNIFICANT CHANGES OR EXTENDED PERIODS OF HIGH FUEL COSTS WOULD MATERIALLY AFFECT DELTA'S OPERATING RESULTS Delta's results of operations can be significantly impacted by changes in the price and availability of jet fuel. Changes in jet fuel prices and availability have industry-wide impact. Accordingly, lower jet fuel prices may be offset by increased price competition and lower revenues for all air carriers. Moreover, there can be no assurance that Delta will be able to increase its fares in response to any future increases in fuel prices. Delta's jet fuel purchase contracts do not provide material protection against price increases or for assured availability of supplies. Delta purchases most of its jet fuel from petroleum refiners under contracts which establish the price based on various market indices. Delta also purchases aircraft fuel on the spot market, from off-shore sources and under contracts which permit the refiners to set the price and give Delta the right to terminate upon short notice if the price is unacceptable. Although Delta is currently able to obtain adequate supplies of jet fuel, it is impossible to predict the future availability or price of jet fuel. Political disruptions or war involving oil producing countries, changes 23 in government policy concerning aircraft fuel production, transportation or marketing, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events may result in fuel supply shortages and fuel price increases in the future. EMPLOYEE STRIKES AND OTHER LABOR-RELATED DISRUPTIONS MAY ADVERSELY AFFECT DELTA'S OPERATIONS Delta's business is labor intensive, requiring large numbers of pilots, flight attendants, mechanics and other personnel. Strikes or labor disputes with unionized employees of Delta or Delta's affiliates may adversely affect Delta's ability to conduct its business. As of March 31, 2003 Delta and Delta's wholly- owned subsidiaries had a total of 72,200 full-time equivalent employees. Approximately 18% of these employees are represented by unions. Relations between air carriers and labor unions in the U.S. are governed by the Railway Labor Act, which provides that a collective bargaining agreement between an airline and a labor union does not expire, but instead becomes amendable as of a stated date. Delta's wholly-owned subsidiary, Atlantic Southeast Airlines, Inc. ("ASA"), is in collective bargaining negotiations with the Air Line Pilots Association, International ("ALPA"), which represents ASA's approximately 1,520 pilots. The outcome of these collective bargaining negotiations cannot presently be determined. In addition to the current ASA-ALPA negotiations, if Delta or Delta's affiliates are unable to reach agreement with any of their unionized work groups on future negotiations regarding the terms of their collective bargaining agreements, Delta may be subject to work interruptions or stoppages. Work stoppages may adversely affect Delta's ability to conduct its operations. U.S. FEDERAL LAW IMPOSES LIMITATIONS ON FOREIGN OWNERSHIP OF U.S. AIRLINES AND VOTING BY NON-U.S. CITIZENS U.S. federal law on foreign ownership of U.S. airlines requires that no more than 25% of Delta's capital stock be voted, directly or indirectly, by persons who are not U.S. citizens, and that Delta's president and at least two-thirds of the members of Delta's board of directors be U.S. citizens. As such, Delta will not register any shares of its capital stock on its stock register if the amount so registered would exceed the foreign ownership restrictions imposed by federal law. Accordingly, if and for so long as the combined foreign ownership holdings of Delta's capital stock reaches the 25% threshold imposed by federal law, no other non-U.S. citizen will be able to register its shares of common stock on Delta's stock register and vote its shares. WE EXPECT THAT WE WILL NEED TO RAISE SIGNIFICANT ADDITIONAL FINANCING In the aftermath of the events of September 11, 2001, Delta raised substantial amounts of funding to finance capital commitments and day-to-day operations. Delta expects that it will need to raise significant additional financing in the future to cover its liquidity needs. To the extent Delta may be unable to access the capital markets for long-term capital spending requirements or short-term liquidity needs, or Delta's financing costs continue to increase, including as a result of further credit rating downgrades, Delta's business, financial position and results of operations would be materially adversely impacted. OUR INDEBTEDNESS AND OTHER OBLIGATIONS ARE SUBSTANTIAL AND COULD AFFECT OUR BUSINESS We have now and will continue to have a significant amount of indebtedness. As of March 31, 2003, we had approximately $11.3 billion of indebtedness, or $12.1 billion on a pro forma basis, after giving effect to the financings described under "Recent Developments." Our substantial indebtedness could have important consequences. For example, it could: - limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate purposes; - require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the funds available to us for other purposes; 24 - make us more vulnerable to economic downturns, limiting our ability to withstand competitive pressures and reducing our flexibility in responding to changing business and economic conditions; and - limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate. Any of the foregoing could adversely affect our business and our ability to service our debt. RISK FACTORS RELATING TO THE AIRLINE INDUSTRY THE AIRLINE INDUSTRY IS HIGHLY COMPETITIVE Delta faces significant competition with respect to domestic and international routes, services and fares. All domestic routes served by Delta are subject to competition from both new and established carriers, some of which have substantially lower costs than Delta and service virtually all of Delta's domestic routes. On most domestic and international routes, Delta competes with at least one, and usually more than one, scheduled passenger airline. Delta also competes with all-cargo carriers, charter airlines and, particularly on its shorter routes, with surface transportation. International marketing alliances formed by domestic and foreign carriers, such as the Star Alliance (among United Airlines, Lufthansa German Airlines and others), the Oneworld Alliance (among American Airlines, British Airways and others) and the Wings Alliance (between Northwest Airlines and KLM-Royal Dutch Airlines), have significantly increased competition in international markets. Through marketing and codesharing arrangements with U.S. carriers, foreign carriers have obtained access to interior U.S. routes. Similarly, U.S. carriers have increased their ability to sell international transportation such as transatlantic services to and beyond European cities. The airline industry is characterized by substantial price competition. If price reductions are not offset by increases in traffic or changes in the mix of traffic that improve Delta's passenger mile yield, Delta's operating results will be adversely affected. THE AIRLINE INDUSTRY IS SUBJECT TO EXTENSIVE GOVERNMENT REGULATION Airlines are subject to extensive regulatory and legal compliance requirements that result in significant costs. The FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that require significant expenditures. Some FAA requirements cover, among other things, security measures, collision avoidance systems, airborne windshear avoidance systems, noise abatement and other environmental concerns, commuter aircraft safety and increased inspections and maintenance procedures to be conducted on older aircraft. Delta expects to continue incurring expenses to comply with the FAA's regulations. Additional laws, regulations, taxes and airport rates and charges have been proposed from time to time that could significantly increase the cost of airline operations or reduce revenues. For example, the Aviation and Transportation Security Act, which became law in November 2001, mandates the federalization of certain airport security procedures and imposes additional security requirements on airports and airlines, most of which are funded by a new per-ticket tax on passengers and a new tax on airlines. Subsequently, on April 16, 2003, President Bush signed into law the Emergency Wartime Supplemental Appropriations Act which provides, among other things, for certain payments to the airline industry. See "Recent Developments." The ability of U.S. carriers to operate international routes is subject to change because the applicable arrangements between the United States and foreign governments may be amended from time to time, or because appropriate slots or facilities are not made available. Delta cannot provide assurance that laws or regulations enacted in the future will not adversely affect it. 25 SEASONALITY AND OTHER FACTORS IMPACT DEMAND FOR AIR TRAVEL In general, demand for air travel is higher in the June and September quarters, particularly in international markets, because there is more vacation travel during these periods than during the remainder of the year. Demand for air travel is also affected by factors such as economic conditions, war or the threat of war, fare levels and weather conditions. In addition, demand for air travel at particular airlines may be impacted from time to time by, among other things, actual or threatened disruptions to operations due to labor issues. Due to these and other factors, operating results for an interim period are not necessarily indicative of operating results for an entire year, and operating results for a historical period are not necessarily indicative of operating results for a future period. THE AIRLINE INDUSTRY HAS SUFFERED SIGNIFICANT LOSSES; AIRLINE BANKRUPTCIES AND OTHER RESTRUCTURING EFFORTS COULD ADVERSELY AFFECT THE INDUSTRY The airline industry as a whole suffered significant losses in 2001 and 2002 and is expected to suffer significant losses for all of 2003. Many airlines, in addition to Delta, have announced reductions in capacity, service and workforce in response to the industry-wide reductions in passenger demand and yields. In addition, since September 11, 2001, several air carriers have sought to reorganize under Chapter 11 of the Bankruptcy Code, including US Airways, Inc., the seventh largest U.S. air carrier, and UAL Corporation (United Airlines), the second largest U.S. air carrier. Since filing for Chapter 11 on August 11, 2002, US Airways has emerged from bankruptcy. Additionally, AMR Corporation (American Airlines) has recently announced that it restructured certain labor costs and lowered its operating cost base. Successful completion of such reorganizations or restructurings could present Delta with competitors that have significantly lower operating costs derived from renegotiated labor, supply, and financing contracts. Historically, air carriers involved in reorganizations have undertaken substantial fare discounting in order to maintain cash flows and to enhance continued customer loyalty. Such fare discounting could further lower yields for all carriers, including Delta. In addition, the market value of aircraft would likely be negatively impacted if a number of air carriers, including US Airways and United Airlines, seek to further reduce capacity by eliminating aircraft from their fleets. The bankruptcies of these airlines and the possibility of bankruptcy for other airlines could make it more difficult and/or more costly for Delta to obtain financing. See "Risk Factors -- Risk Factors Relating to the Certificates and the Exchange Offer -- Appraisals and Realizable Value of Aircraft." THE AIRLINE INDUSTRY HAS BEEN SIGNIFICANTLY IMPACTED BY THE SARS OUTBREAK During the March 2003 quarter, the SARS outbreak, primarily centered in China and other Southeast Asian countries, with a number of cases in Toronto, Canada, also significantly impacted airline industry revenues. Due to our small Pacific presence, however, the SARS outbreak had only a minimal impact on our March 2003 quarter revenues. We are not able to estimate the impact SARS may have on our future revenues due to uncertainty related to the spread of this outbreak. RISK FACTORS RELATING TO THE CERTIFICATES AND THE EXCHANGE OFFER CONSEQUENCES OF FAILURE TO EXCHANGE If you fail to deliver the proper documentation to the Exchange Agent in a timely fashion, your tender of Old Class G Certificates will be rejected. The New Class G Certificates will be issued in exchange for the Old Class G Certificates only after timely receipt by the Exchange Agent of the Old Class G Certificates, a properly completed and executed Letter of Transmittal, or an Agent's Message in lieu of the Letter of Transmittal, and all other required documentation. If you wish to tender your Old Class G Certificates in exchange for New Class G Certificates, you should allow sufficient time to ensure timely delivery. None of the Exchange Agent, the Trustee or Delta is under any duty to give holders of Old Class G Certificates notification of defects or irregularities with respect to tenders of Old Class G Certificates for exchange. 26 If you do not exchange you Old Class G Certificates for New Class G Certificates pursuant to the Exchange Offer, or if your tender of Old Class G Certificates is not accepted, your Old Class G Certificates will continue to be subject to the restrictions on transfer of such Old Class G Certificates as set forth in the legend thereon. In general, you may not offer or sell Old Class G Certificates unless they are registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state under the Securities Act. We do not currently anticipate that we will register the Old Class G Certificates under the Securities Act. To the extent that Old Class G Certificates are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but accepted Old Class G Certificates could be adversely affected. APPRAISALS AND REALIZABLE VALUE OF AIRCRAFT Three independent appraisal and consulting firms have prepared appraisals of the Aircraft. The appraisal letters provided by these firms are annexed to this Prospectus as Appendix II. Such appraisals are based on varying assumptions and methodologies (which may differ among the appraisers), and may not accurately reflect the current market value of the Aircraft. Base value is the theoretical value for an aircraft that assumes a balanced market, while current market value is the value for an aircraft in the actual market. The appraisals were prepared without a physical inspection of the Aircraft. Appraisals that are based on other assumptions and methodologies may result in valuations that are materially different from those contained in such appraisals. See "Description of the Aircraft and the Appraisals -- The Appraisals." An appraisal is only an estimate of value. It does not necessarily indicate the price at which an aircraft may be purchased from the aircraft manufacturer. Nor should an appraisal be relied upon as a measure of realizable value. The proceeds realized upon a sale of any Aircraft may be less than its appraised value. The value of an Aircraft if remedies are exercised under the applicable Indenture will depend on various factors, including market and economic conditions; the supply of similar aircraft; the availability of buyers; the condition of the Aircraft; and whether the Aircraft is sold separately or as part of a block. In addition, the value of the Aircraft has been negatively affected as a consequence of the events of September 11, 2001 referred to under "-- Risk Factors Relating to Business Environment -- The Terrorist Attacks in 2001, Military Action in Iraq and Other World Events Adversely Affected, and May Continue to Adversely Affect, Delta's Financial Results." In its appraisal letter, one of the appraisers points out that, as a result of the events of September 11, 2001, there has been a significant negative effect on current market values of all commercial aircraft and that the present used aircraft market is considered to be a distressed market. Accordingly, we cannot assure you that the proceeds realized from the sale of any Aircraft would be sufficient to satisfy in full payments due on the Equipment Notes relating to such Aircraft or the full amount of distributions expected on the Certificates. REPOSSESSION There will be no general geographic restrictions on our ability to operate the Aircraft. Although we do not currently intend to do so, we are permitted to register the Aircraft in certain foreign jurisdictions and to lease the Aircraft. It may be difficult, time-consuming and expensive for the Loan Trustee to exercise its repossession rights if an Aircraft is located outside the United States, is registered in a foreign jurisdiction or is leased to a foreign or domestic operator. Additional difficulties may exist if a lessee is the subject of a bankruptcy, insolvency or similar event. In addition, some jurisdictions may allow for other liens or other third party rights to have priority over a Loan Trustee's security interest in an Aircraft. As a result, the benefits of the related Loan Trustee's security interest in an Aircraft may be less than they would be if the Aircraft were located or registered in the United States. 27 PRIORITY OF DISTRIBUTIONS; SUBORDINATION Under the Intercreditor Agreement, the Primary Liquidity Provider will receive payment of all amounts owed to it, and the Policy Provider will receive certain amounts owed to it, before the holders of any Class of Certificates receive any funds. In addition, in specified default situations, the Subordination Agent and the Trustees will receive certain payments before the holders of any Class of Certificates receive distributions. See "Description of the Intercreditor Agreement -- Priority of Distributions." If Delta is in bankruptcy or other specified defaults have occurred but Delta is continuing to meet specified payment obligations and the applicable Loan to Aircraft value tests are met, the subordination provisions applicable to the Certificates permit distributions to be made to junior Certificates prior to making distributions in full on more senior Certificates. For a more detailed discussion of the subordination provisions of the Intercreditor Agreement, see "Description of the Certificates -- Subordination." CONTROL OVER COLLATERAL; SALE OF COLLATERAL Subject to certain conditions, the Loan Trustee under each Indenture will be directed by the Subordination Agent (at the direction of the Controlling Party) in exercising remedies under such Indenture, including accelerating the applicable Equipment Notes or foreclosing the lien on the Aircraft securing such Equipment Notes. See "Description of the Certificates -- Indenture Events of Default and Certain Rights Upon an Indenture Event of Default." Subject to the following two paragraphs, if Final Distributions have not been fully paid to the holders of the Class G Certificates or if any obligations payable to the Policy Provider under the Intercreditor Agreement remain outstanding, so long as no Policy Provider Default has occurred and is continuing, the Policy Provider will be the Controlling Party. At any other time the Controlling Party will be: - if Final Distributions have not been fully paid to holders of the Class G Certificates, the Class G Trustee; - if Final Distributions have been fully paid to the holders of the Class G Certificates, but not to the holders of the Class C Certificates, the Class C Trustee; and - if Final Distributions have been fully paid to the holders of the Class C Certificates, the Class D Trustee. Under certain circumstances, and notwithstanding the foregoing, the Primary Liquidity Provider will be the Controlling Party, unless the Policy Provider pays to the Primary Liquidity Provider all outstanding drawings and interest thereon owing to the Primary Liquidity Provider under the Primary Liquidity Facility, in which case the Policy Provider will be the Controlling Party (so long as no Policy Provider Default has occurred and is continuing). During the continuation of any Indenture Event of Default, the Controlling Party may accelerate the Equipment Notes issued under the related Indenture and sell such Equipment Notes or the related Aircraft, subject to certain limitations. See "Description of the Intercreditor Agreement -- Intercreditor Rights -- Sale of Equipment Notes or Aircraft." The market for any Aircraft or Equipment Notes, as the case may be, during any Indenture Event of Default may be very limited, and we cannot assure you as to whether they could be sold or the price at which they could be sold. If the Controlling Party sells any Equipment Notes for less than their outstanding principal amount or sells any Aircraft for less than the outstanding principal amount of the related Equipment Notes, certain holders of Certificates will receive a smaller amount of principal distributions than anticipated and, if the shortfall arises from the sale of the Equipment Notes, will not have any claim for the shortfall against Delta, any Trustee, any Liquidity Provider or the Policy Provider (except, with respect to the holders of the Class G Certificates, as described in "Description of the Policy and the Policy Provider Agreement -- The Policy"). 28 RATINGS OF THE CERTIFICATES When issued the Old Class G Certificates were assigned ratings of Aaa by Moody's Investors Service, Inc. ("Moody's") and AAA by Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc. ("Standard & Poor's," and together with Moody's, the "Rating Agencies"). The Class C and D Certificates are not rated. A rating is not a recommendation to purchase, hold or sell the Class G Certificates and the rating does not address market price of the Class G Certificates or suitability of investing in the Class G Certificates for a particular investor. A rating may not remain for any given period of time and may be lowered or withdrawn entirely by a Rating Agency if in its judgment circumstances in the future (including the downgrading of Delta, the Policy Provider, the Primary Liquidity Provider or the Above-Cap Liquidity Provider) so warrant. The ratings of the Class G Certificates are based primarily on the default risk of the Policy Provider and address the likelihood of timely payment of interest when due on the Class G Certificates and the ultimate payment of principal of the Class G Certificates by the Final Legal Distribution Date. Such ratings do not address the possibility of certain defaults, voluntary redemptions or other circumstances (such as an Event of Loss to an Aircraft) which could result in the payment of the outstanding principal amount of the Class G Certificates prior to the Final Expected Distribution Date specified in "Summary -- Summary of the Terms of the Certificates." See "Description of the Certificates." The reduction, suspension or withdrawal of the ratings of the Class G Certificates will not, by itself, constitute an Indenture Event of Default. ABOVE-CAP LIQUIDITY FACILITY The Above-Cap Liquidity Facility for the Class G Certificates provides that upon the occurrence of certain events, such Above-Cap Liquidity Facility shall be terminated. If the Above-Cap Liquidity Facility is so terminated, the Above-Cap Liquidity Provider is required to deposit into the Above-Cap Reserve Account a termination payment expected to be sufficient to cover future payments under the Above-Cap Liquidity Facility, assuming the LIBOR will not exceed 20%. See "Description of Liquidity Facilities -- Above-Cap Liquidity Facility -- Payments." Thus, if LIBOR at any time exceeds 20%, there can be no assurance that the amounts available in the Above-Cap Reserve Account related to the terminated Above-Cap Liquidity Facility would be sufficient to cover any interest shortfalls on the Class G Certificates as otherwise described herein. NO PROTECTION AGAINST HIGHLY LEVERAGED OR EXTRAORDINARY TRANSACTIONS The Certificates, the Equipment Notes and the underlying agreements will not contain any financial or other covenants or "event risk" provisions protecting the Certificateholders in the event of a highly leveraged or other extraordinary transaction affecting Delta or its affiliates. LIMITED ABILITY TO RESELL THE CERTIFICATES Prior to the Exchange Offer, there has been no public market for the Class G Certificates. Neither Delta nor the Class G Trust intends to apply for listing of the Class G Certificates on any securities exchange or otherwise. In addition, until the Class G Certificates are registered under the Securities Act, they will be subject to restrictions on transfer. The Initial Purchasers may assist in resales of the Class G Certificates, but they are not required to do so, and any market-making activity may be discontinued at any time without notice at the sole discretion of each Initial Purchaser. A secondary market for the Class G Certificates may not develop. If a secondary market does develop, it might not continue or it might not be sufficiently liquid to allow you to resell any of your Class G Certificates. If an active public market does not develop, the market price and liquidity of the Class G Certificates may be adversely affected. 29 RISK FACTORS RELATING TO THE POLICY PROVIDER THE IMPACT OF ANY DECLINE IN THE FINANCIAL CONDITION OF THE POLICY PROVIDER The AAA rating by Standard & Poor's and the Aaa rating by Moody's of the Class G Certificates are based, primarily, on the existence of the Policy insuring the timely and full payment of interest accrued and payable on the Class G Certificates on each Regular Distribution Date and the payment of principal on or (under certain circumstances) before the Final Legal Distribution Date. Any decline in the financial condition of the Policy Provider or the insolvency of the Policy Provider may result in the downgrade of the foregoing ratings of the Class G Certificates and may impair the ability of the Policy Provider to make payments to the holders of the Class G Certificates pursuant to the Policy. In addition, in the event of the insolvency of the Policy Provider, under insurance insolvency proceedings it is possible that the Subordination Agent would be unable to recover the full amount due under the Class G Certificates on its unsecured claim against the Policy Provider. For information on the financial information generally available with respect to the Policy Provider, see "Description of the Policy Provider" and "Description of the Policy and the Policy Provider Agreement -- The Policy." THE LIMITED NATURE OF THE POLICY Although drawings under the Policy for interest payments may be made when interest is due, drawings for principal payments may not, except in certain circumstances, be made until the Final Legal Distribution Date for the Class G Certificates. The Policy provides no coverage for the Class C or Class D Certificates. THE POLICY PROVIDER AS A CONTROLLING PARTY Unless a Policy Provider Default has occurred, the Policy Provider will act as the Controlling Party until the Final Distributions are distributed to the holders of the Class G Certificates and all obligations payable to the Policy Provider under the Intercreditor Agreement are reimbursed (unless the Primary Liquidity Provider has the right to become the Controlling Party). As the Controlling Party, the Policy Provider will have the ability, subject to certain limitations, to direct the Subordination Agent in the exercise of all remedies, including the ability to direct the Subordination Agent to sell any or all of the Equipment Notes or to instruct the Loan Trustee under the applicable Indenture to accelerate the Equipment Notes issued under such Indenture and to foreclose upon the lien created thereunder. As the Controlling Party, the Policy Provider will be in a position to take actions that are beneficial to the Policy Provider and the holders of the Class G Certificates but detrimental to the holders of the Class C or Class D Certificates. OTHER RISK FACTOR ARTHUR ANDERSEN LLP AUDITED CERTAIN FINANCIAL INFORMATION INCLUDED OR INCORPORATED IN THIS PROSPECTUS. IN THE EVENT SUCH FINANCIAL INFORMATION IS LATER DETERMINED TO CONTAIN FALSE STATEMENTS, YOU MAY BE UNABLE TO RECOVER DAMAGES FROM ARTHUR ANDERSEN LLP. Our consolidated balance sheet as of December 31, 2001 and the related statements of operations, shareholders' equity and cash flows for the fiscal years ending December 31, 2001, 2000, 1999 and 1998 were audited by Arthur Andersen LLP. Arthur Andersen LLP has ceased operations in the U.S. As a result, you may be limited in your ability to recover damages from Arthur Andersen LLP under the Securities Act if it is later determined that there are false statements contained in any portions of this Prospectus that have been prepared in reliance on financial data audited by Arthur Andersen LLP. 30 THE EXCHANGE OFFER The following summary describes certain provisions of the registration rights agreement, dated as of January 30, 2003 (the "Registration Rights Agreement"), among Delta, the Initial Purchasers and the Trustee. This summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Registration Rights Agreement, which have been filed as exhibits to the Registration Statement. Copies are available as set forth under "Where You Can Find More Information." GENERAL In connection with the issuance of the Old Class G Certificates, the Initial Purchasers became entitled to the benefits of the Registration Rights Agreement. Pursuant to the Registration Rights Agreement, we have agreed to use our reasonable best efforts to, within 270 calendar days after January 30, 2003, which is the date the Old Class G Certificates were issued (the "Issuance Date"): (i) file the Registration Statement, of which this Prospectus is a part, with the Commission for a registered exchange offer (the "Exchange Offer") with respect to an issue of New Class G Certificates identical in all material respects to the Old Class G Certificates (except that the New Class G Certificates would not contain terms with respect to transfer restrictions or interest rate increases); (ii) cause the Registration Statement to become effective; and (iii) have the Registration Statement remain effective until the closing of the Exchange Offer. We have agreed to commence the Exchange Offer promptly after the Registration Statement has been declared effective and to use our reasonable best efforts to have the Exchange Offer consummated no later than 60 days after the effective date. However, if any changes in law or the applicable interpretations of the staff of the Commission do not permit us to effect the Exchange Offer, or if the Registration Statement is not declared effective within 270 calendar days after the Issuance Date under certain circumstances, or at the request of a holder not eligible to participate in the Exchange Offer or under certain other circumstances described in the Registration Rights Agreement, we have agreed to use our reasonable best efforts to (a) file with the Commission a shelf registration statement (the "Shelf Registration Statement") covering resales of the Old Class G Certificates; (b) cause the Shelf Registration Statement to be declared effective under the Securities Act by the 270th calendar day after the Issuance Date; and (c) keep effective the Shelf Registration Statement for a period of two years after its effective date (or for such shorter period as shall end when all of the Old Class G Certificates covered by the Shelf Registration Statement have been sold pursuant thereto or may be freely sold pursuant to Rule 144 under the Securities Act). If neither the consummation of the Exchange Offer nor the declaration by the Commission of the Shelf Registration Statement to be effective (each, a "Registration Event") occurs on or prior to the 270th calendar day following the Issuance Date, the interest rate per annum borne by the Equipment Notes and passed through to holders of Old Class G Certificates will be increased by 0.25% effective from and including October 27, 2003, to but excluding the date on which a Registration Event occurs. If the Shelf Registration Statement ceases to be effective at any time during the period we are required to keep such Shelf Registration Statement effective for more than 60 days, whether or not consecutive, during any 12-month period, the interest rate per annum borne by the Equipment Notes will be increased by 0.25% from the 61st day such Shelf Registration Statement ceases to be effective during the applicable period until such time as the Shelf Registration Statement again becomes effective. If the Exchange Offer is consummated, we will not be required to file the Shelf Registration Statement other than for those Old Class G Certificates held by the Initial Purchasers if they are not eligible to participate in the Exchange Offer, and the interest rate on the Equipment Notes will not be increased. Upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal, we will accept for exchange all Old Class G Certificates validly tendered prior to 5:00 p.m., New York City time, on the Expiration Date. New Class G Certificates of the same class will be issued in exchange for an equal face amount (and current Pool Balance) of outstanding Old Class G Certificates accepted in the Exchange Offer. Old Class G Certificates may be tendered only in integral 31 multiples of $100,000. The Exchange Agent will act as agent for the tendering holders of Old Class G Certificates for the purpose of receiving New Class G Certificates from the Trustee and delivering New Class G Certificates to such tendering holders. Old Class G Certificates shall be deemed to have been accepted as validly tendered when, as and if we have given oral or written notice thereof to the Exchange Agent. The Exchange Offer is not conditioned upon any minimum amount of Old Class G Certificates being tendered for exchange. However, the obligation to accept Old Class G Certificates for exchange pursuant to the Exchange Offer is subject to certain conditions as set forth herein under "-- Conditions." Based on interpretations by the staff of the Commission set forth in no-action letters issued to third parties, we believe that the New Class G Certificates issued pursuant to the Exchange Offer in exchange for Old Class G Certificates may be offered for resale, resold or otherwise transferred by a holder thereof (other than (i) a broker-dealer who purchased such Old Class G Certificates directly from the Trustee for its own account or (ii) a person that is an "affiliate," as defined in Rule 405 under the Securities Act, of ours or of any Trustee) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holder is acquiring such New Class G Certificates in its ordinary course of business and such holder has no arrangements or understanding with any person to participate in the distribution of the New Class G Certificates. Holders of Old Class G Certificates wishing to accept the Exchange Offer must represent to us that such conditions have been met. We have not sought, and do not intend to seek, a no-action letter from the Commission with respect to the effects of the Exchange Offer, and there can be no assurance that the staff of the Commission would make a similar determination with respect to the New Class G Certificates as it has in such no-action letters. Each broker-dealer that receives New Class G Certificates for its own account as a result of market-making or other trading activities must acknowledge that it will deliver a prospectus in connection with any resale of such New Class G Certificates. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, such broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by such a broker-dealer in connection with resales of New Class G Certificates received in exchange for Old Class G Certificates. We have agreed that, for a period of 90 days after the Expiration Date, we will make this Prospectus and any amendment or supplement to this Prospectus available to any such broker-dealer for use in connection with such resales. See "Plan of Distribution." If a broker-dealer would receive New Class G Certificates for its own account in exchange for Old Class G Certificates, where such Old Class G Certificates were not acquired as a result of market-making or other trading activities, such broker-dealer will not be able to participate in the Exchange Offer. Upon consummation of the Exchange Offer, subject to certain exceptions, holders of Old Class G Certificates who do not exchange their Old Class G Certificates for New Class G Certificates in the Exchange Offer will no longer be entitled to registration rights and will not be able to offer or sell their Old Class G Certificates, unless such Old Class G Certificates are subsequently registered under the Securities Act which, subject to limited exceptions, we will have no obligation to do, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. See "Risk Factors -- Risk Factors Relating to the Certificates and the Exchange Offer -- Consequences of Failure to Exchange." This Prospectus, together with the Letter of Transmittal, is being sent to all registered holders of Certificates as of , 2003. As of the date of this Prospectus, $391,583,000 face amount ($386,844,695 Pool Balance) of Old Class G Certificates are outstanding. Principal payments in the amount of approximately $5,055,600 are due on July 25, 2003. If any tendered Old Class G Certificates are not accepted for exchange because of an invalid tender or the occurrence of certain other events set forth herein, certificates for any such unaccepted Old Class G Certificates will be returned, without expenses, to the tendering holder thereof as promptly as practicable after the Expiration Date. 32 Holder of Old Class G Certificates who tender in the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Old Class G Certificates pursuant to the Exchange Offer. We will pay all charges and expenses, other than certain applicable taxes, in connection with the Exchange Offer. See "-- Fees and Expenses." EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION The term "Expiration Date" means , 2003 ( calendar days following the commencement of the Exchange Offer), unless we, in our sole discretion, extend the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date to which the Exchange Offer is extended. Notwithstanding any extension of the Exchange Offer, if the Exchange Offer is not consummated by October 27, 2003, the interest rate borne by the Equipment Notes and passed through to the Certificateholders is subject to increase. See "-- General." In order to extend the Expiration Date, we will notify the Exchange Agent of any extension by oral or written notice and will mail to the record holders of Old Class G Certificates an announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Such announcement may state that we are extending the Exchange Offer for a specified period of time. We reserve the right: - to delay acceptance of any Old Class G Certificates, to extend the Exchange Offer or to terminate the Exchange Offer and not permit acceptance of Old Class G Certificates not previously accepted if any of the conditions set forth herein under "-- Conditions" have occurred and have not been waived by us, by giving oral or written notice of such delay, extension or termination to the Exchange Agent; and - to amend the terms of the Exchange Offer in any manner deemed by us to be advantageous to the holders of the Old Class G Certificates. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the Exchange Agent. If the Exchange Offer is amended in a manner determined by us to constitute a material change, we will promptly disclose such amendment in a manner reasonably calculated to inform the holders of the Old Class G Certificates of such amendment. Without limiting the manner in which we may choose to make a public announcement of any delay, extension, amendment or termination of the Exchange Offer, we shall have no obligation to publish, advertise, or otherwise communicate any such public announcement, other than by making a timely release to an appropriate news agency. DISTRIBUTIONS ON THE NEW CLASS G CERTIFICATES Interest on the Equipment Notes held by each Trust will be distributed to holders of the New Class G Certificates. The Equipment Notes held by the Class G Trust will accrue interest at the rate per annum set forth on the cover page of this Prospectus. Distributions on the New Class G Certificates will be made from the last date on which distributions were made on the Old Class G Certificates surrendered in exchange therefor. No additional distributions will be made on Old Class G Certificates tendered and accepted for exchange. PROCEDURES FOR TENDERING To tender in the Exchange Offer, a holder must complete, sign and date the Letter of Transmittal, or a facsimile thereof, or an Agent's Message in lieu of the Letter of Transmittal, have the signatures thereon guaranteed if required by the Letter of Transmittal and mail or otherwise deliver such Letter of Transmittal or such facsimile and any other required documents to the Exchange Agent, or have the 33 Agent's Message delivered, prior to 5:00 p.m., New York City time, on the Expiration Date. In addition, either: - certificates for such Old Class G Certificates must be received by the Exchange Agent along with the Letter of Transmittal; or - a timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old Class G Certificates, if such procedure is available, into the Exchange Agent's account at DTC pursuant to the procedure for book-entry transfer described under "-- Book-Entry Transfer" below, must be received by the Exchange Agent prior to the Expiration Date; or - the holder must comply with the guaranteed delivery procedures described below. The method of delivery of Old Class G Certificates, Letters of Transmittal and all other required documents is at the election and risk of the holders. If such delivery is by mail, it is recommended that registered mail, properly insured, with return receipt requested, be used. In all cases, sufficient time should be allowed to assure timely delivery. No Letters of Transmittal or Old Class G Certificates should be sent to Delta. Delivery of all documents must be made to the Exchange Agent at its address set forth below. Holders may also request their respective brokers, dealers, commercial banks, trust companies or nominees to effect such tender for such holders. The tender by a holder of Old Class G Certificates will constitute an agreement between such holder and Delta in accordance with the terms and subject to the conditions set forth in this Prospectus and in the Letter of Transmittal. Only a holder of Old Class G Certificates may tender such Old Class G Certificates in the Exchange Offer. The term "holder" with respect to the Exchange Offer means any person in whose name Old Class G Certificates are registered on the Trustee's books or any other person who has obtained a properly completed bond power from the registered holder, or any person whose Old Class G Certificates are held of record by DTC who desires to deliver Old Class G Certificates by book-entry transfer at DTC. Any beneficial holder whose Old Class G Certificates are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on its behalf. If such beneficial holder wishes to tender on its own behalf, such beneficial holder must, prior to completing and executing the Letter of Transmittal and delivering its Old Class G Certificates, either make appropriate arrangements to register ownership of the Old Class G Certificates in such holder's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (each, an "Eligible Institution") unless the Old Class G Certificates tendered pursuant thereto are tendered (a) by a registered holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (b) for the account of an Eligible Institution. If the Letter of Transmittal is signed by a person other than the registered holder or holders of any Old Class G Certificates listed therein, such Old Class G Certificates must be endorsed or accompanied by bond powers and a proxy that authorizes such person to tender the Old Class G Certificates on behalf of the registered holder or holders, in either case as the name of the registered holder or holders appears on the Old Class G Certificates. If the Letter of Transmittal or any Old Class G Certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by us, submit with the Letter of Transmittal evidence satisfactory to us of their authority to so act. 34 All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of the tendered Old Class G Certificates will be determined by us in our sole discretion, which determination will be final and binding. We reserve the absolute right to reject any and all Old Class G Certificates not properly tendered or any Old Class G Certificates our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the absolute right to waive any irregularities or conditions of tender as to particular Old Class G Certificates. Our interpretation of the terms and conditions of the Exchange Offer, including the instructions in the Letter of Transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Class G Certificates must be cured within such time as we shall determine. Neither we, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Old Class G Certificates nor shall any of us incur any liability for failure to give such notification. Tenders of Old Class G Certificates will not be deemed to have been made until such irregularities have been cured or waived. Any Old Class G Certificates received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned without cost by the Exchange Agent to the tendering holder of such Old Class G Certificates (or, in the case of Old Class G Certificates tendered by the book-entry transfer procedures described below, such Old Class G Certificates will be credited to an account maintained with DTC), unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. In addition, we reserve the right in our sole discretion, subject to the provisions of the Intercreditor Agreement, Policy Provider Agreement and Indentures, to (a) purchase or make offers for any Old Class G Certificates that remain outstanding subsequent to the Expiration Date or, as set forth under "-- Conditions," to terminate the Exchange Offer in accordance with the terms of the Registration Rights Agreements and (b) to the extent permitted by applicable law, purchase Old Class G Certificates in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers could differ from the terms of the Exchange Offer. By tendering, each holder of Old Class G Certificates will represent to us that, among other things, the New Class G Certificates acquired pursuant to the Exchange Offer are being obtained in the ordinary course of such holder's business, such holder has no arrangements or understanding with any person to participate in the distribution of the New Class G Certificates and such holder is not an "affiliate," as defined under Rule 405 of the Securities Act, of ours or of a Trustee, or if such holder is an affiliate, that such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the holder is not a broker-dealer, such holder will be required to represent that it is not engaged in, and does not intend to engage in, a distribution of New Class G Certificates. If such holder is a broker-dealer that will receive New Class G Certificates for its own account in exchange for Old Class G Certificates that were acquired as a result of market-making or other trading activities, it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such New Class G Certificates. ACCEPTANCE OF OLD CLASS G CERTIFICATES FOR EXCHANGE; DELIVERY OF NEW CLASS G CERTIFICATES Upon satisfaction or waiver of all of the conditions to the Exchange Offer, all Old Class G Certificates properly tendered will be accepted promptly after the Expiration Date, and New Class G Certificates will be issued promptly after acceptance of the Old Class G Certificates. See "-- Conditions" below. For purposes of the Exchange Offer, Old Class G Certificates shall be deemed to have been accepted for exchange when, as and if we have given oral or written notice thereof to the Exchange Agent. In all cases, issuance of New Class G Certificates for Old Class G Certificates that are accepted for exchange pursuant to the Exchange Offer will be made only after timely receipt by the Exchange Agent of (i) certificates for such Old Class G Certificates or a timely Book-Entry Confirmation of such Old Class G Certificates into the Exchange Agent's account at DTC, (ii) a properly completed and duly executed Letter of Transmittal, or an Agent's Message in lieu of the Letter of Transmittal, and (iii) all other required documents. If any tendered Old Class G Certificates are not accepted for any reason set 35 forth in the terms and conditions of the Exchange Offer or if Old Class G Certificates are submitted for a greater face amount than the holder desires to exchange, such unaccepted or nonexchanged Old Class G Certificates will be returned without expense to the tendering holder thereof (or, in the case of Old Class G Certificates tendered by the book-entry transfer procedures described below, such unaccepted or nonexchanged Old Class G Certificates will be credited to an account maintained with DTC) as promptly as practicable after the expiration or termination of the Exchange Offer. BOOK-ENTRY TRANSFER The Exchange Agent will make a request to establish an account with respect to the Old Class G Certificates at DTC for purposes of the Exchange Offer. The Exchange Agent and DTC have confirmed that any financial institution that is a DTC Participant may use DTC's Automated Tender Offer Program ("ATOP")procedures to tender Old Class G Certificates in the Exchange Offer. Any financial institution that is a participant in DTC's book-entry transfer system may make book-entry delivery of Old Class G Certificates by causing DTC to transfer such Old Class G Certificates into the Exchange Agent's account at DTC in accordance with DTC's ATOP procedures for transfer. However, although delivery of Old Class G Certificates may be effected through book-entry transfer into the Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile thereof) with any required signature guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be transmitted to and received by the Exchange Agent at the address set forth below under "-- Exchange Agent" on or prior to 5:00 p.m., New York City time, on the Expiration Date. The term "Agent's Message" means a message, transmitted by DTC and received by the Exchange Agent and forming part of a Book-Entry Confirmation, that states that DTC has received an express acknowledgment from a DTC Participant tendering Old Class G Certificates that are the subject of such Book-Entry Confirmation that such DTC Participant has received and agrees to be bound by the terms of the Letter of Transmittal, and that we may enforce such agreement against such DTC Participant. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. GUARANTEED DELIVERY PROCEDURES Holders of the Old Class G Certificates who wish to tender their Old Class G Certificates and (i) whose Old Class G Certificates are not immediately available, or (ii) who cannot deliver their Old Class G Certificates, the Letter of Transmittal or any other required documents to the Exchange Agent prior to the Expiration Date, or (iii) who cannot complete the procedure for book-entry transfer on a timely basis, may tender their Old Class G Certificates if: - the tender is made through an Eligible Institution; - prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed notice of guaranteed delivery (by facsimile transmission, mail or hand delivery), setting forth the name and address of the holder of Old Class G Certificates and the amount of Old Class G Certificates tendered, stating that the tender is being made thereby and guaranteeing that within five business days after the Expiration Date, the Letter of Transmittal (or facsimile thereof) together with the certificate(s) representing the Old Class G Certificates to be tendered in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent; and - such properly completed and executed Letter of Transmittal (or facsimile thereof) together with the certificates representing the Old Class G Certificates to be tendered in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and all other documents required by the Letter of Transmittal are received by the Exchange Agent within five business days after the Expiration Date. 36 WITHDRAWAL OF TENDERS Tenders of Old Class G Certificates may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date at the address set forth below under "-- Exchange Agent." Any such notice of withdrawal must specify the name of the person having tendered the Old Class G Certificates to be withdrawn, identify the Old Class G Certificates to be withdrawn, including the face amount of such Old Class G Certificates, and (where certificates for Old Class G Certificates have been transmitted) specify the name in which such Old Class G Certificates are registered, if different from that of the withdrawing holder. If certificates for Old Class G Certificates have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates, the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such holder is an Eligible Institution. If Old Class G Certificates have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Old Class G Certificates and otherwise comply with the procedures of DTC. We will determine all questions as to the validity, form and eligibility (including time of receipt) of such notices. Our determination shall be final and binding on all parties. Any Old Class G Certificates so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Old Class G Certificates that have been tendered for exchange but that are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of Old Class G Certificates tendered by book-entry transfer into the Exchange Agent's account at DTC pursuant to the book-entry transfer procedures described above, such Old Class G Certificates will be credited to an account maintained with DTC for the Old Class G Certificates) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Old Class G Certificates may be retendered by following one of the procedures described under "-- Procedures for Tendering" and "-- Book-Entry Transfer" above at any time on or prior to the Expiration Date. CONDITIONS Notwithstanding any other term of the Exchange Offer, we will not be required to accept for exchange, or exchange New Class G Certificates for, any Old Class G Certificates not previously accepted for exchange, and we may terminate or amend the Exchange Offer before the acceptance of such Old Class G Certificates, if: (i) any action or proceeding is instituted or threatened in any court or by or before a governmental agency with respect to the Exchange Offer that, in our judgement, might materially impair our ability to proceed with the Exchange Offer or (ii) any law, statute or regulation is proposed, adopted or enacted, or any existing laws, statute, rule or regulation is interpreted by the staff of the Commission or a court of competent jurisdiction in a manner that, in our judgement, might materially impair our ability to proceed with the Exchange Offer. In addition, we have no obligation to, and will not knowingly, permit acceptance of tenders of Old Class G Certificates from our affiliates (within the meaning of Rule 405 under the Securities Act) or from any other holder or holders who are not eligible to participate in the Exchange Offer under applicable law or interpretations thereof by the Commission, or if the New Class G Certificates to be received by such holder or holders of Old Class G Certificates in the Exchange Offer, upon receipt, will not be tradable by such holder without restriction under the Securities Act and the Exchange Act and without material restrictions under the "blue sky" or securities laws of substantially all of the states of the United States. 37 EXCHANGE AGENT U.S. Bank Trust National Association has been appointed as Exchange Agent for the Exchange Offer. Questions and requests for assistance and requests for additional copies of this Prospectus or of the Letter of Transmittal should be directed to the Exchange Agent addressed as follows: U.S. Bank Trust National Association c/o U.S. Bank Corporate Trust Services 180 East Fifth Street St. Paul, MN 55101 Attention: Specialized Finance Facsimile Transmission: (651) 244-1537 Confirm by Telephone: (800) 934-6802 FEES AND EXPENSES We will pay the expenses of soliciting tenders pursuant to the Exchange Offer. The principal solicitation for tenders pursuant to the Exchange Offer is being made by mail; however, additional solicitations may be made by telegraph, telephone, telecopy or in person by our officers and regular employees. We will not make any payments to brokers, dealers or other persons soliciting acceptances of the Exchange Offer. We will, however, pay the Exchange Agent reasonable and customary fees for its services and will reimburse the Exchange Agent for its reasonable out-of-pocket expenses in connection with its services. We may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of the Prospectus and related documents to the beneficial owners of the Old Class G Certificates, and in handling or forwarding tenders for exchange. We will pay the expenses to be incurred in connection with the Exchange Offer, including fees and expenses of the Exchange Agent and Trustee and accounting, legal, printing and related fees and expenses. We will pay all transfer taxes, if any, applicable to the exchange of Old Class G Certificates pursuant to the Exchange Offer. If, however, certificates representing New Class G Certificates or Old Class G Certificates for amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Old Class G Certificates tendered, or if tendered Old Class G Certificates are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Old Class G Certificates pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. 38 THE COMPANY Delta is a major air carrier that provides air transportation for passengers and freight throughout the United States and around the world. Based on the most currently available data, Delta is the second largest carrier in terms of passengers carried and the third largest as measured by operating revenues and revenue passenger miles flown. Delta is the leading U.S. transatlantic airline offering the most daily flight departures, servicing the largest number of nonstop routes and carrying more passengers than any other U.S. airline. We operate hubs at Atlanta, Cincinnati, Dallas/Fort Worth and Salt Lake City. We also operate international gateways in Atlanta and at New York's John F. Kennedy International Airport. Delta is a Delaware corporation headquartered in Atlanta, Georgia. Our address is Hartsfield Atlanta International Airport, Atlanta, Georgia 30320, and the telephone number is (404) 715-2600. Our website is www.delta.com. The information contained in our website is not part of this Prospectus. RECENT DEVELOPMENTS NETWORK DEVELOPMENTS During the September 2002 quarter, Delta entered into a marketing agreement with Continental Airlines and Northwest Airlines. This agreement includes codesharing, frequent flyer program and airport lounge reciprocity. During the March 2003 quarter, the U.S. Department of Transportation completed its review of the marketing agreement, which Delta expects to begin to implement later in 2003. In March 2003, as a result of declining demand due to military action in Iraq, Delta announced a short-term, 12% reduction in planned mainline capacity which was fully implemented beginning in April 2003. In June 2003, we will begin restoring some of these flights so that our flight schedule for June 2003 will reflect a 7% reduction from our original mainline capacity plan. On April 15, 2003, Delta launched a new low-fare service designed to appeal to price-sensitive leisure travelers. The new unit, called Song, will gradually replace Delta's existing low-fare product known as Delta Express. Song will deploy 36 Boeing 757 aircraft. By the fall of 2003, Song plans to offer 144 daily flights to all three major New York City airports as well as airports in Boston, Massachusetts; Hartford, Connecticut; Las Vegas, Nevada; Los Angeles, California; San Juan, Puerto Rico; Tampa, Orlando, Fort Myers and Fort Lauderdale, Florida; and Washington, D.C.; and later expansion across Delta's route network. DELTA REPORTS MARCH 2003 QUARTER AND FISCAL YEAR 2002 NET LOSS Delta reported a net loss of $466 million for the March 2003 quarter, or $3.81 loss per common share, compared to a net loss of $397 million for March 2002 quarter, or $3.25 loss per common share. For the fiscal year ended December 31, 2002, Delta reported a net loss of $1.3 billion, or $10.44 loss per common share, compared to a net loss of $1.2 billion, or $9.99 loss per common share, for the fiscal year ended December 31, 2001. Delta's March 2003 quarter operating revenues increased 2% compared to the March 2002 quarter, while operating expenses increased 4% compared to the same period a year ago. Delta estimates that its net loss for the June 2003 quarter will be substantially greater than Delta's net loss in the June 2002 quarter. This estimate excludes the $398.3 million of payments that we received from the U.S. government under the Appropriations Act. Delta does not expect improvement in the revenue environment through 2003 and also expects significant cost pressures related to increases in pension and interest expenses to continue. As a result, Delta expects to report a net loss for 2003. Delta's capacity for the March 2003 quarter was down 2% compared to the March 2002 quarter, and down 12% compared to the March 2001 quarter. 39 RECENT FINANCINGS Subsequent to March 31, 2003, Delta completed the following transactions: - Due to the expiration of our accounts receivable securitization agreement on March 31, 2003, we paid $250 million on April 2, 2003, which represented the total amount owed to a third party by our wholly-owned subsidiary. Subsequent to this payment, we began collecting the receivables previously securitized under this agreement. - On April 15, 2003, we entered into a series of financing arrangements with General Electric Capital Corporation ("GECC") comprised of (1) a commitment from GECC to provide $409 million of irrevocable, direct-pay letters of credit to support our obligations related to $403 million principal amount of outstanding municipal bonds and (2) three floating rate credit facilities under which we borrowed a total of $352 million due in installments through 2010. On May 1, 2003, we entered into a definitive agreement with GECC related to the $409 million of irrevocable, direct-pay letters of credit. These arrangements are secured by certain aircraft, spare engines and spare parts. - On April 15, 2003, we terminated our credit facility under which we were able to borrow up to $500 million on a secured basis until August 21, 2003. No borrowings were outstanding under this facility. The aircraft previously reserved as collateral under this facility are being used as collateral in connection with the financing transactions with GECC described above and the $138 million financing described below. - On April 30, 2003, we borrowed $138 million due in installments through April 2018, which is secured by certain aircraft. - On June 2, 2003 and June 20, 2003, respectively, we issued $300 million and $50 million, respectively, of our 8% Convertible Senior Notes due 2023 in a private placement. OTHER RECENT DEVELOPMENTS On April 16, 2003, President Bush signed into law the Appropriations Act which provides for, among other things: - Payments for Certain Security Fees. Payments totaling $2.3 billion from the U.S. government to U.S. air carriers in the proportional share each such air carrier has paid or collected, as of April 16, 2003, in passenger security and air carrier security fees to Transportation Security Administration (the "TSA"). - Executive Compensation Limits. A requirement that certain airlines which receive the security fee payments described above execute a contract with the TSA agreeing that the air carrier will not provide total compensation (as defined in the Appropriations Act) during the 12-month period beginning April 1, 2003 to its two most highly compensated executive officers during its fiscal year 2002 in an amount greater than the annual salary paid to that officer with respect to the air carrier's fiscal year 2002. If it violates this agreement, the air carrier is required to repay its security fee payments described above. We are subject to this requirement. - Compensation for Strengthening Flight Deck Doors. Payments totaling $100 million from the U.S. government to compensate air carriers for the direct costs associated with the strengthening of flight deck doors and locks on aircraft. - Suspension of Passenger Security Fees. The suspension of collection of passenger security fees during the period beginning June 1, 2003 and ending September 30, 2003. - Insurance. An extension for one year until August 2004 of the U.S. government's obligation to sell war and terrorism risk insurance coverage to air carriers. 40 We received payments of $398.3 million under the Appropriations Act during the June 2003 quarter. In accordance with the Appropriations Act, we executed a contract with the Government regarding the executive compensation limits described above. OTHER COST REDUCTION INITIATIVES We believe it is essential for us to reduce our costs to compete in this business environment. Accordingly during the March 2003 quarter, we continued to develop and implement initiatives to achieve our goal of reducing non-fuel unit costs by 15% by the end of 2005. In addition, we recently presented a proposal to the ALPA, which represents Delta's pilots, to move towards a competitive pilot cost structure. ALPA has not yet formally responded to this proposal. Our collective bargaining agreement with ALPA becomes amendable in May 2005. STOCK OPTION EXCHANGE PROGRAM On June 30, 2003, Delta announced that it had completed an employee stock option exchange program, which expired on June 25, 2003. Delta canceled options to purchase approximately 31.6 million shares of its common stock and will issue new options to purchase approximately 12.1 million shares of common stock in exchange. Approximately 80% of the eligible options were exchanged under the program. Under the terms of the offer Delta, expects to grant replacement stock options on December 26, 2003. SALE OF EQUITY INTEREST IN WORLDSPAN, L.P. On July 1, 2003, Delta announced that it had completed the sale of its equity interest in WORLDSPAN, L.P., which operates and markets a computer reservation system and related systems for the travel industry, for $285 million in cash and credits totaling approximately $125 million over nine years against future Worldspan-provided services, and a $45 million subordinated promissory note which matures in 2012. Worldspan was purchased by Travel Transaction Processing Corporation, an acquisition vehicle formed by Citigroup Venture Capital Equity Partners L.P. and Teachers' Merchant Bank. USE OF PROCEEDS There will be no cash proceeds from the issuance of the New Class G Certificates pursuant to the Exchange Offer. The proceeds from the sale of the Old Class G Certificates was used by the Class G Trust to acquire the Series G Equipment Notes. The Series G Equipment Notes are full recourse obligations of Delta. Delta used the proceeds from the issuance of the Series G Equipment Notes for general corporate purposes. DESCRIPTION OF THE POLICY PROVIDER GENERAL The information set forth in this section, including any financial statements incorporated by reference herein, has been provided by Ambac Assurance Corporation ("Ambac" or the "Policy Provider") for inclusion in this Prospectus, and such information has not been independently verified by Delta, the Initial Purchasers, the Trustees or the Liquidity Providers. Accordingly, notwithstanding anything to the contrary herein, none of Delta, the Initial Purchasers, the Trusts or the Liquidity Providers assumes any responsibility for the accuracy, completeness or applicability of such information. Ambac is a Wisconsin-domiciled stock insurance corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin and licensed to do business in 50 states, the District of Columbia, the Commonwealth of Puerto Rico and the Territory of Guam. Ambac primarily insures newly-issued municipal and structured finance obligations. Ambac is a wholly-owned subsidiary of Ambac Financial Group, Inc., a 100% publicly-held company. Standard & Poor's and Fitch Ratings have each 41 assigned a "AAA" financial strength rating to Ambac and Moody's has assigned a "Aaa" financial strength rating to Ambac. The following are hereby incorporated by reference into this Prospectus and will be deemed to be a part hereof: (i) the consolidated financial statements of the Policy Provider and its subsidiaries as of December 31, 2002 and December 31, 2001, and for each of the years in the three-year period ended December 31, 2002, prepared in accordance with accounting principles generally accepted in the United States of America, included in the Annual Report on Form 10-K of Ambac Financial Group, Inc. (which was filed with the SEC on March 28, 2003, SEC File Number 1-10777); (ii) the unaudited consolidated financial statements of the Policy Provider and its subsidiaries as of March 31, 2003 and for the periods ending March 31, 2003 and March 31, 2002 included in the Quarterly Report on Form 10-Q of Ambac Financial Group, Inc. for the period ended March 31, 2003 (which was filed with the SEC on May 15, 2003); and (iii) the Current Reports on Form 8-K filed with the SEC on January 24, 2003, February 28, 2003, March 4, 2003, March 20, 2003, March 26, 2003, March 31, 2003 and April 21, 2003, as such reports relate to Ambac. Any statement contained in a document incorporated herein by reference shall be modified or superseded for the purposes of this Prospectus to the extent that a statement contained in this Prospectus or in any other document subsequently filed with the SEC that is also incorporated in this Prospectus modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. All documents filed by Ambac Financial Group, Inc. with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, including any financial statements contained therein, subsequent to the date of this Prospectus and prior to the termination of the offering of the Class G Certificates, shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the respective dates of filing of those documents. 42 The following table sets forth the capitalization of Ambac as of December 31, 2001, December 31, 2002 and March 31, 2003, in conformity with accounting principles generally accepted in the United States of America. AMBAC FINANCIAL INFORMATION AMBAC ASSURANCE CORPORATION AND SUBSIDIARIES CONSOLIDATED CAPITALIZATION TABLE ($ MILLIONS)
DECEMBER 31, DECEMBER 31, MARCH 31, 2001 2002 2003 ------------ ------------ ----------- (UNAUDITED) Unearned premiums................................ $1,790 $2,137 $2,174 Other liabilities................................ 972 1,977 2,101 ------ ------ ------ Total liabilities.............................. 2,762 4,113 4,275 ------ ------ ------ Stockholder's equity: Common stock................................... 82 82 82 Additional paid-in capital..................... 928 920 995 Accumulated other comprehensive income......... 81 231 237 Retained earnings.............................. 2,386 2,849 2,974 ------ ------ ------ Total stockholder's equity..................... 3,477 4,082 4,288 ------ ------ ------ Total liabilities and stockholder's equity..... $6,239 $8,195 $8,563 ====== ====== ======
For additional financial information concerning Ambac and its subsidiaries, see the audited financial statements of Ambac and its subsidiaries incorporated by reference herein. Copies of the filings with the SEC relating to Ambac incorporated in this Prospectus as described above, including the financial statements of Ambac contained therein, and copies of Ambac's annual statement for the year ended December 31, 2002 prepared on the basis of accounting practices prescribed or permitted by the State of Wisconsin Office of the Commissioner of Insurance are available, without charge, from Ambac. The address of Ambac's administrative offices and its telephone number are One State Street Plaza, 19th Floor, New York, New York, 10004 and (212) 668-0340. Ambac makes no representation regarding the New Class G Certificates or the advisability of investing in the New Class G Certificates and makes no representation regarding, nor has it participated in the preparation of, this Prospectus other than the information supplied by Ambac and presented under the heading "Description of the Policy Provider" and in the financial statements of Ambac and the other filings by Ambac with the SEC incorporated herein by reference. IN THE EVENT THAT AMBAC WERE TO BECOME INSOLVENT, ANY CLAIMS ARISING UNDER THE POLICY WOULD BE EXCLUDED FROM COVERAGE BY THE CONNECTICUT GUARANTY ASSOCIATION. 43 DESCRIPTION OF THE CERTIFICATES The following summary of particular terms of the Certificates does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Basic Agreement, the Certificates, the Trust Supplements, the Liquidity Facilities, the Intercreditor Agreement, the Reference Agency Agreement and the Policy, which have been filed as exhibits to the Registration Statement. Copies are available as set forth under "Where You Can Find More Information." Except as otherwise indicated, the following summary relates to each of the Trusts and the Certificates issued by each Trust. The terms and conditions governing each of the Trusts are substantially the same, except as described under "-- Subordination" below and elsewhere in this Prospectus and except that the principal amount and scheduled principal repayments of the Equipment Notes held by each Trust and the interest rate and maturity date of the Equipment Notes held by each Trust differ. GENERAL The Class G, Class C and Class D Certificates were issued on January 30, 2003. Each pass through certificate (collectively, the "Certificates") represents a fractional undivided interest in one of the three Delta Air Lines 2003-1 Pass Through Trusts: the "Class G Trust," the "Class C Trust" and the "Class D Trust," and, collectively, the "Trusts." The Trusts were formed pursuant to a pass through trust agreement between Delta and U.S. Bank Trust National Association (as successor trustee to State Street Bank and Trust Company of Connecticut, National Association), as trustee, dated November 16, 2000 (the "Basic Agreement"), and three separate supplements thereto (each, a "Trust Supplement" and, together with the Basic Agreement, collectively, the "Pass Through Trust Agreements"). The trustee under the Class G Trust, the Class C Trust and the Class D Trust is referred to herein, respectively, as the "Class G Trustee," the "Class C Trustee" and the "Class D Trustee," and collectively as the "Trustees." The Certificates issued by the Class G Trust, the Class C Trust and the Class D Trust are referred to herein, respectively, as the "Class G Certificates," the "Class C Certificates" and the "Class D Certificates". The Class G Trust purchased all of the Series G Equipment Notes, the Class C Trust purchased all of the Series C Equipment Notes and the Class D Trust purchased all of the Series D Equipment Notes. The holders of the Class G Certificates, the Class C Certificates and the Class D Certificates are referred to herein, respectively, as the "Class G Certificateholders," the "Class C Certificateholders" and the "Class D Certificateholders," and collectively as the "Certificateholders." The sum of the initial principal balance of the Equipment Notes held by each Trust equaled the initial aggregate face amount of the Certificates issued by such Trust. The New Class G Certificates will be issued pursuant to the Class G Pass Through Trust Agreement. The forms and terms of the New Class G Certificates are the same in all material respects as the form and terms of the Old Class G Certificates, except that: - we registered the New Class G Certificates under the Securities Act so their transfer is not restricted like the Old Class G Certificates; - the New Class G Certificates will not contain restrictions on transfer or provisions relating to interest rate increases; and - the New Class G Certificates will be available only in book-entry form. Each Certificate represents a fractional undivided interest in the Trust created by the Basic Agreement and the applicable Trust Supplement pursuant to which such Certificate is issued. (Basic Agreement, Section 2.01) The property of each Trust (the "Trust Property") will consist of: - subject to the Intercreditor Agreement, the Equipment Notes acquired by such Trust, all monies at any time paid thereon and all monies due and to become due thereunder; - the rights of such Trust under the Intercreditor Agreement (including all rights to receive monies receivable in respect of such rights); 44 - for the Class G Trust, all monies receivable under the Liquidity Facilities; - for the Class G Trust, all monies receivable under the Policy; and - funds from time to time deposited with the Trustee in accounts relating to such Trust. The Certificates represent interests in the respective Trusts only, and all payments and distributions thereon will be made only from the Trust Property of the related Trust. (Basic Agreement, Section 3.09) The Certificates do not represent indebtedness of the Trusts, and references in this Prospectus to interest accruing on the Certificates are included for purposes of computation only. The Certificates do not represent an interest in or obligation of Delta, the Trustees, the Subordination Agent, any of the Loan Trustees or any affiliate of any thereof. Each Certificateholder by its acceptance of a Certificate agrees to look solely to the income and proceeds from the Trust Property of the related Trust for payments and distributions on such Certificate. The New Class G Certificates will be issued in fully registered form only and will be subject to the provisions described below under "-- Book-Entry Registration; Delivery and Form." The New Class G Certificates will be issued only in minimum denominations of $1,000 or integral multiples thereof. (Basic Agreement, Section 3.01) DISTRIBUTION OF PAYMENTS ON EQUIPMENT NOTES The following description of distributions on the Certificates should be read in conjunction with the description of the Intercreditor Agreement because the Intercreditor Agreement may alter the following provisions in a default situation. See "-- Subordination" and "Description of the Intercreditor Agreement." Payments of principal, Break Amount (if any), Make-Whole Amount (if any) and interest on the Equipment Notes or with respect to other Trust Property held in each Trust will be distributed by the Trustee to Certificateholders of such Trust on the date receipt of such payment is confirmed, except in the case of certain types of Special Payments. The Equipment Notes held in each Trust will accrue interest at the applicable rate per annum for Certificates issued by such Trust, payable on January 25, April 25, July 25 and October 25 of each year, commencing on April 25, 2003. The rate per annum for the Class G Certificates is set forth on the cover page of this Prospectus. The Equipment Notes held in the Class C Trust and the Class D Trust will accrue interest at LIBOR for each Interest Period plus a margin of 2.00% and 2.50% per annum, respectively. The interest rate applicable to each Class of Certificates is referred to as the "Stated Interest Rate" for such Trust. Such interest payments will be distributed to Certificateholders of such Trust on each such date until the final Distribution Date for such Trust, subject to the Intercreditor Agreement. Interest will be calculated on the basis of the actual number of days elapsed over a 360-day year. Interest payable on the Equipment Notes will be determined based on LIBOR. See "Description of the Equipment Notes -- Determination of LIBOR" for an explanation of how LIBOR is to be determined for each Interest Period. As promptly as practicable after the determination of LIBOR for an Interest Period under the Reference Agency Agreement, the Reference Agent will give notice of such determination of LIBOR to Delta, the Trustees, the Loan Trustees, the Subordination Agent, the Policy Provider and the Liquidity Providers. Distributions of interest applicable to the Class G Certificates will be supported by the Primary Liquidity Facility and the Above-Cap Liquidity Facility, which together are expected to provide an aggregate amount sufficient to distribute interest on the Pool Balance thereof at the Stated Interest Rate for the Class G Trust on up to six successive quarterly Regular Distribution Dates (without regard to any future distributions of principal of the Class G Certificates). The Liquidity Facilities do not provide for drawings thereunder to pay for principal of, Break Amount or Make-Whole Amount on the Class G Certificates, any interest with respect to the Class G Certificates in excess of the Stated Interest Rate or principal of, interest, Break Amount or Make-Whole Amount with respect to the Certificates of any other 45 Class. Therefore, only the holders of the Class G Certificates will be entitled to receive and retain the proceeds of drawings under the Primary Liquidity Facility and the Above-Cap Liquidity Facility. See "Description of the Liquidity Facilities." After use of any available funds under the Primary Liquidity Facility, the Primary Cash Collateral Account and the Above-Cap Account, the payment of interest on the Class G Certificates will be supported by the Policy. See "Description of the Policy and the Policy Provider Agreement -- The Policy." Payments of principal of the Series G Equipment Notes are scheduled to be received by the Trustee in installments on January 25, April 25, July 25 and October 25 in certain years, commencing on April 25, 2003 and ending on January 25, 2008. The entire principal amount of the Series C Equipment Notes will be payable on January 25, 2008. Payments of principal of the Series D Equipment Notes are scheduled to be received by the Trustee in installments on January 25, April 25, July 25 and October 25 in certain years, commencing on April 25, 2003 and ending on January 25, 2008. Scheduled payments of interest on or principal of the Equipment Notes are referred to herein as "Scheduled Payments," and January 25, April 25, July 25 and October 25 of each year are referred to herein as "Regular Distribution Dates" (each Regular Distribution Date and Special Distribution Date, a "Distribution Date"). See "Description of the Equipment Notes -- Principal and Interest Payments." The "Final Legal Distribution Date" for the Class G Certificates is July 25, 2009. Payment of principal of the Class G Certificates on the Final Legal Distribution Date and, in certain limited circumstances earlier, will be supported by the Policy. See "Description of the Policy and the Policy Provider Agreement -- The Policy." Subject to the Intercreditor Agreement, on each Regular Distribution Date the Trustee of each Trust will distribute to the Certificateholders of such Trust all Scheduled Payments received in respect of Equipment Notes held on behalf of such Trust, the receipt of which is confirmed by the Trustee on such Regular Distribution Date. Each Certificateholder of each Trust will be entitled to receive, subject to the Intercreditor Agreement, its proportionate share, based upon its fractional interest in such Trust, of any distribution in respect of Scheduled Payments of principal of or interest on Equipment Notes held on behalf of such Trust. Each such distribution of Scheduled Payments will be made by the applicable Trustee to the Certificateholders of record of the relevant Trust on the record date applicable to such Scheduled Payment (15 days prior to each Regular Distribution Date) subject to certain exceptions. (Basic Agreement, Section 4.02(a)) If a Scheduled Payment is not received by the applicable Trustee on a Regular Distribution Date but is received within five days thereafter, it will be distributed on the date received to such holders of record. If it is received after such five-day period, it will be treated as a Special Payment and distributed as described below. Any payment in respect of, or any proceeds of, any Equipment Note, or the Collateral under, and as defined in, any Indenture other than a Scheduled Payment (each, a "Special Payment") will be distributed on, in the case of an early redemption of any Equipment Note, the date of such early redemption (which shall be a Business Day), and otherwise on the Business Day specified for distribution of such Special Payment pursuant to a notice delivered by each Trustee as soon as practicable after the Trustee has received notice of such Special Payment, or has received the funds for such Special Payment (each, a "Special Distribution Date"), as described below. Any such distribution will be subject to the Intercreditor Agreement. The Trustee of each Trust will mail a notice to the Certificateholders of such Trust stating the scheduled Special Distribution Date, the related record date, the amount of the Special Payment and the reason for the Special Payment. In the case of a redemption of the Equipment Notes held in the related Trust, such notice will be mailed not less than 15 days prior to the date such Special Payment is scheduled to be distributed, and in the case of any other Special Payment, such notice will be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment. (Basic Agreement, Section 4.02(c)) Each distribution of a Special Payment, other than a Final 46 Distribution, on a Special Distribution Date for any Trust will be made by the Trustee to the Certificateholders of record of such Trust on the record date applicable to such Special Payment. (Basic Agreement, Section 4.02(b)) See "-- Indenture Events of Default and Certain Rights Upon an Indenture Event of Default" and "Description of the Equipment Notes -- Redemption." In the case of the distribution of proceeds from any "No Proceeds Drawing" or "Avoidance Drawing" as described in "Description of the Policy and the Policy Provider Agreement -- The Policy," the Class G Trustee will mail a notice to the Class G Certificateholders stating the scheduled Special Distribution Date, the related Record Date, the amount of such distribution and the reason for such distribution. Such notice will be mailed not less than 15 days prior to the date such proceeds are scheduled to be distributed. Each such distribution will be made by the Class G Trustee to the Certificateholders of record of the related Trust on the Record Date applicable to such distribution. (Basic Agreement, Section 4.02(c)) Each Pass Through Trust Agreement requires that the Trustee establish and maintain, for the related Trust and for the benefit of the Certificateholders of such Trust, one or more non-interest bearing accounts (the "Certificate Account") for the deposit of payments representing Scheduled Payments received by such Trustee. Each Pass Through Trust Agreement requires that the Trustee establish and maintain, for the related Trust and for the benefit of the Certificateholders of such Trust, one or more accounts (the "Special Payments Account") for the deposit of payments representing Special Payments received by such Trustee, which will be non-interest bearing except in certain circumstances where the Trustee may invest amounts in such account in certain Permitted Investments. Pursuant to the terms of each Pass Through Trust Agreement, the Trustee is required to deposit any Scheduled Payments relating to the applicable Trust received by it in the Certificate Account of such Trust and to deposit any Special Payments so received by it in the Special Payments Account of such Trust. (Basic Agreement, Section 4.01) All amounts so deposited will be distributed by the Trustee on a Regular Distribution Date or a Special Distribution Date, as appropriate. (Basic Agreement, Section 4.02) The Final Distribution for each Trust will be made only upon presentation and surrender of the Certificates for such Trust at the office or agency of the Trustee specified in the notice given by the Trustee of such Final Distribution. See "-- Termination of the Trusts" below. Distributions in respect of Certificates issued in global form will be made as described in "-- Book-Entry Registration; Delivery and Form" below. If any Distribution Date is not a Business Day, distributions scheduled to be made on such Regular Distribution Date or Special Distribution Date will be made on the next succeeding Business Day and interest shall be added for such additional period. "Business Day" means, with respect to the Certificates of any Class, any day (a) other than a Saturday, a Sunday or a day on which, (i) commercial banks are required or authorized to close in New York, New York, Atlanta, Georgia, or, so long as any Certificate of such Class is outstanding, the city and state in which the Trustee, the Subordination Agent or any related Loan Trustee maintains its corporate trust office or receives and disburses funds, or (ii) with respect to draws under the Policy, the fiscal agent (if any) under the Policy, at its office specified in the Policy, the Policy Provider, at its office specified in the Policy, and insurance companies in New York, New York are required or authorized by law or executive order to close and (b) with respect to drawings under any Liquidity Facility, which is a "Business Day" as defined in such Liquidity Facility. SUBORDINATION The Certificates are subject to subordination terms set forth in the Intercreditor Agreement which vary depending upon whether a Triggering Event has occurred. See "Description of the Intercreditor Agreement -- Priority of Distributions." POOL FACTORS The "Pool Balance" of the Certificates issued by any Trust indicates, as of any date, the original aggregate face amount of the Certificates of such Trust less the aggregate amount of all payments made in 47 respect of the Certificates of such Trust other than payments made in respect of interest or Break Amount or Make-Whole Amount thereon or reimbursement of any costs and expenses incurred in connection therewith. The Pool Balance of the Certificates issued by any Trust as of any Distribution Date will be computed after giving effect to any payment of principal of the Equipment Notes or other Trust Property held in such Trust and the distribution thereof to be made on that date and, with respect to the Class G Trust, payments under the Policy made for the benefit of the Class G Certificateholders (other than in respect of the Primary Liquidity Facility and interest on the Class G Certificates). (Basic Agreement, Section 1.01) The "Pool Factor" for each Trust as of any date is the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance as of such date by (ii) the original aggregate face amount of the Certificates of such Trust. The Pool Factor for each Trust as of any Distribution Date will be computed after giving effect to any payment of principal of the Equipment Notes or other Trust Property held in such Trust and the distribution thereof to be made on that date. (Basic Agreement, Section 1.01) The Pool Factor for each Trust will be 1.0000000 on the date of issuance of the Certificates; thereafter, the Pool Factor for each Trust will decline as described herein to reflect reductions in the Pool Balance of such Trust. The amount of a Certificateholder's pro rata share of the Pool Balance of a Trust can be determined by multiplying the original denomination of the Certificateholder's Certificate of such Trust by the Pool Factor for such Trust as of the applicable Distribution Date. Notice of the Pool Factor and the Pool Balance for each Trust will be mailed to Certificateholders of such Trust on each Distribution Date. (Basic Agreement, Section 4.03) The following table sets forth the aggregate principal amortization schedule for the Equipment Notes held in each Trust and resulting Pool Factors with respect to such Trust. The actual aggregate principal amortization schedule applicable to a Trust and the resulting Pool Factors with respect to such Trust may differ from those set forth below because the scheduled distribution of principal payments for any Trust would be affected if any Equipment Notes held in such Trust are redeemed or if a default in payment of the principal of such Equipment Notes occurred.
CLASS G CLASS C CLASS D ----------------------------- --------------------------- --------------------------- SCHEDULED SCHEDULED EXPECTED SCHEDULED PAYMENTS OF EXPECTED PAYMENTS OF POOL PAYMENTS OF EXPECTED DATE PRINCIPAL POOL FACTOR PRINCIPAL FACTOR PRINCIPAL POOL FACTOR - ---- --------------- ----------- --------------- --------- ------------- ----------- April 25, 2003 $ 4,738,304.37 0.9878996 $ 0.00 1.0000000 $3,024,107.49 0.9537542 July 25, 2003 5,055,599.68 0.9749889 0.00 1.0000000 3,896,791.59 0.8941629 October 25, 2003 8,121,834.91 0.9542479 0.00 1.0000000 4,060,886.36 0.8320622 January 25, 2004 7,142,942.21 0.9360067 0.00 1.0000000 3,571,443.77 0.7774463 April 25, 2004 5,111,926.94 0.9229522 0.00 1.0000000 2,555,943.92 0.7383598 July 25, 2004 6,153,134.89 0.9072387 0.00 1.0000000 3,076,543.91 0.6913121 October 25, 2004 9,359,979.69 0.8833358 0.00 1.0000000 4,679,954.08 0.6197444 January 25, 2005 8,493,582.34 0.8616454 0.00 1.0000000 4,246,758.71 0.5548014 April 25, 2005 4,935,221.70 0.8490422 0.00 1.0000000 2,467,591.97 0.5170660 July 25, 2005 7,241,510.92 0.8305492 0.00 1.0000000 3,620,727.80 0.4616964 October 25, 2005 7,480,110.05 0.8114470 0.00 1.0000000 3,740,026.46 0.4045024 January 25, 2006 6,586,698.90 0.7946263 0.00 1.0000000 3,293,324.27 0.3541396 April 25, 2006 4,709,386.88 0.7825998 0.00 1.0000000 2,354,675.42 0.3181310 July 25, 2006 7,067,614.38 0.7645509 0.00 1.0000000 3,533,780.17 0.2640911 October 25, 2006 8,615,463.15 0.7425493 0.00 1.0000000 4,307,698.65 0.1982161 January 25, 2007 7,831,689.67 0.7225492 0.00 1.0000000 3,915,814.91 0.1383339 April 25, 2007 4,482,619.97 0.7111018 0.00 1.0000000 2,241,292.84 0.1040592 July 25, 2007 6,068,003.41 0.6956057 0.00 1.0000000 3,033,978.51 0.0576624 October 25, 2007 7,540,795.02 0.6763485 0.00 1.0000000 3,770,368.68 0.0000044 January 25, 2008 264,846,580.92 0.0000000 135,423,000.00 0.0000000 290.49 0.0000000
48 The Pool Factor and Pool Balance of each Trust will be recomputed if there has been an early redemption or default in the payment of principal or interest in respect of one or more of the Equipment Notes held in a Trust, as described in "-- Indenture Events of Default and Certain Rights Upon an Indenture Event of Default" and "Description of the Equipment Notes -- Redemption," or any drawing under the Policy (other than in respect of interest on the Certificates). Notice of the Pool Factors and Pool Balances of each Trust as so recomputed after giving effect to any Special Payment to Certificateholders resulting from such an early redemption or default in respect of one more Equipment Notes will be mailed to Certificateholders of Certificates of the related Trust with such Special Payment, as described in "-- Reports to Certificateholders." REPORTS TO CERTIFICATEHOLDERS On each Distribution Date, the applicable Trustee will include with each distribution of a Scheduled Payment or Special Payment to Certificateholders of the related Trust a statement, giving effect to such distribution to be made on such Distribution Date, setting forth the following information (per $1,000 aggregate principal amount of Certificates as to items (1) and (2) below): (1) the amount of such distribution allocable to principal and the amount allocable to Break Amount and Make-Whole Amount, if any, indicating any portion thereof paid by the Policy Provider in the case of the Class G Certificates; (2) the amount of such distribution allocable to interest, indicating any portion thereof paid by the Liquidity Providers and/or Policy Provider in the case of the Class G Certificates; (3) the Pool Balance and the Pool Factor for such Trust; and (4) LIBOR for the current and immediately preceding Interest Periods, as determined by the Reference Agent. (Trust Supplements, Section 6.01) As long as the Class G Certificates are registered in the name of Cede & Co. ("Cede"), as nominee for The Depository Trust Company ("DTC"), on the record date prior to each Distribution Date, the Class G Trustee will request from DTC a securities position listing setting forth the names of all DTC Participants reflected on DTC's books as holding interests in the Class G Certificates on such record date. On each Distribution Date, the Class G Trustee will mail to each such DTC Participant the statement described above and will make available additional copies as requested by such DTC Participant for forwarding to Certificate Owners. (Basic Agreement, Section 4.03(a)) In addition, after the end of each calendar year, the applicable Trustee will prepare for each Certificateholder of each Trust at any time during the preceding calendar year a report containing the sum of the amounts determined pursuant to clauses (1) and (2) above with respect to the Trust for such calendar year or, if such person was a Certificateholder during only a portion of such calendar year, for the applicable portion of such calendar year, and such other items as are readily available to such Trustee and which a Certificateholder reasonably requests as necessary for the purpose of such Certificateholder's preparation of its U.S. federal income tax returns. Such report and such other items will be prepared on the basis of information supplied to the applicable Trustee by the DTC Participants and will be delivered by such Trustee to such DTC Participants to be available for forwarding by such DTC Participants to Certificate Owners. (Basic Agreement, Section 4.03(b)) At such time, if any, as the Class G Certificates are issued in the form of definitive certificates, the Class G Trustee will prepare and deliver the information described above to each Certificateholder of record of the Class G Trust as the name and period of record ownership of such Certificateholder appears on the records of the registrar of the Class G Certificates. INDENTURE EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN INDENTURE EVENT OF DEFAULT Because the Equipment Notes issued under an Indenture are held in more than one Trust, a continuing Indenture Event of Default under such Indenture would affect the Equipment Notes held by 49 each such Trust. For a description of the Indenture Events of Default under each Indenture, see "Description of the Equipment Notes -- Indenture Events of Default, Notice and Waiver." There are no cross-acceleration provisions in the Indentures and the only cross-default provision in the Indentures is an event of default under each Indenture which occurs if all amounts owing under any Equipment Note are not paid in full on the Final Payment Date. Consequently, until the Final Payment Date, events resulting in an Indenture Event of Default under any particular Indenture may or may not result in an Indenture Event of Default under any other Indenture. If the same institution acts as Trustee of multiple Trusts, in the absence of instructions from the Certificateholders of any such Trust, such Trustee could be faced with a potential conflict of interest upon an Indenture Event of Default. In such event, each Trustee has indicated that it would resign as Trustee of some or all such Trusts, and a successor trustee would be appointed in accordance with the terms of the applicable Pass Through Trust Agreement. U.S. Bank Trust National Association, will be the initial Trustee under each Trust. Upon the occurrence and continuation of an Indenture Event of Default under any Indenture, the Controlling Party will direct the Loan Trustee under such Indenture in the exercise of remedies and may accelerate the Equipment Notes issued under such Indenture and sell all (but not less than all) of such Equipment Notes or the related Aircraft to any person, subject to certain limitations. See "Description of the Intercreditor Agreement -- Intercreditor Rights -- Sale of Equipment Notes or Aircraft." The proceeds of such sale will be distributed pursuant to the provisions of the Intercreditor Agreement. Any proceeds so distributed to any Trustee upon any such sale will be deposited in the applicable Special Payments Account and will be distributed to the Certificateholders of the applicable Trust on a Special Distribution Date. (Basic Agreement, Sections 4.01 and 4.02) The market for Equipment Notes at the time of the existence of an Indenture Event of Default may be very limited, and there can be no assurance whether they could be sold or as to the price at which they could be sold. If a Loan Trustee sells any such Equipment Notes for less than their outstanding principal amount, certain Certificateholders will receive a smaller amount of principal distributions than anticipated and will not have any claim for the shortfall against Delta, any Liquidity Provider, the Policy Provider (except in the case of the Class G Certificates) or any Trustee. Neither such Trustee nor the Certificateholders of such Trust, furthermore, could take action with respect to any remaining Equipment Notes held in such Trust as long as no Indenture Events of Default existed with respect thereto. Any amount, other than Scheduled Payments received on a Regular Distribution Date or within five days thereafter, distributed to the Trustee of any Trust by the Subordination Agent on account of the Equipment Notes or other Trust Property held in such Trust following an Indenture Event of Default under any Indenture will be deposited in the Special Payments Account for such Trust and will be distributed to the Certificateholders of such Trust on a Special Distribution Date. (Basic Agreement, Sections 4.01 and 4.02). Any funds representing payments received with respect to any defaulted Equipment Notes held in a Trust, or the proceeds from the sale of any Equipment Notes held by the Trustee in the Special Payments Account for such Trust will, to the extent practicable, be invested and reinvested by such Trustee in certain Permitted Investments pending the distribution of such funds on a Special Distribution Date. (Basic Agreement, Section 4.04) "Permitted Investments" are defined as obligations of the United States or agencies or instrumentalities thereof the payment of which is backed by the full faith and credit of the United States and which mature in not more than 60 days or such lesser time as is required for the distribution of any such funds on a Special Distribution Date. (Basic Agreement, Section 1.01) Each Pass Through Trust Agreement provides that the Trustee of the related Trust will, within 90 days after the occurrence of a default (as defined below) known to it, notify the Certificateholders of such Trust by mail of such default, unless such default has been cured or waived; provided that, except in 50 the case of default in a payment of principal, Break Amount (if any), Make-Whole Amount (if any), or interest on any of the Equipment Notes held in such Trust, the applicable Trustee will be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interests of such Certificateholders. (Basic Agreement, Section 7.02) The term "default" with respect to a Trust, for the purpose of the provision described in this paragraph only, means an event that is, or after notice or lapse of time or both would become, an event of default with respect to such Trust or a Triggering Event under the Intercreditor Agreement. The term "event of default" with respect to a Trust means an Indenture Event of Default under any Indenture pursuant to which Equipment Notes held by such Trust were issued. Subject to certain qualifications set forth in each Pass Through Trust Agreement and to the Intercreditor Agreement, the Certificateholders of each Trust holding Certificates evidencing fractional undivided interests aggregating not less than a majority in interest in such Trust will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to such Trust or pursuant to the terms of the Intercreditor Agreement, or exercising any trust or power conferred on such Trustee under such Pass Through Trust Agreement or the Intercreditor Agreement, including any right of such Trustee as Controlling Party under the Intercreditor Agreement or as holder of the Equipment Notes (the "Noteholder"). (Basic Agreement, Section 6.04) Subject to the Intercreditor Agreement, the holders of the Certificates of a Trust evidencing fractional undivided interests aggregating not less than a majority in interest of such Trust may on behalf of the holders of all of the Certificates of such Trust waive any past "default" or "event of default" under the related Pass Through Trust Agreement and its consequences or, if the Trustee of such Trust is the Controlling Party, may direct the Trustee to instruct the applicable Loan Trustee to waive any past Indenture Event of Default and its consequences; provided, however, the consent of each holder of a Certificate of a Trust is required to waive (i) a default in the deposit of any Scheduled Payment or Special Payment or in the distribution thereof, (ii) a default in payment of the principal, Break Amount, (if any), Make-Whole Amount (if any) or interest with respect to any of the Equipment Notes held in such Trust and (iii) a default in respect of any covenant or provision of the related Pass Through Trust Agreement that cannot be modified or amended without the consent of each Certificateholder of such Trust affected thereby. (Basic Agreement, Section 6.05) Each Indenture will provide that, with certain exceptions, the holders of the majority in aggregate unpaid principal amount of the Equipment Notes issued thereunder may on behalf of all such Noteholders waive any past default or Indenture Event of Default thereunder. Notwithstanding the foregoing provisions of this paragraph, however, pursuant to the Intercreditor Agreement only the Controlling Party will be entitled to waive any such past default or Indenture Event of Default. PURCHASE RIGHTS OF CERTIFICATEHOLDERS After the occurrence and during the continuation of a Triggering Event, with ten days' prior written notice to the Trustee and each Certificateholder of the same Class: - the Class C Certificateholders (other than Delta or any of its affiliates) will have the right to purchase all, but not less than all, of the Class G Certificates (unless the Policy Provider has elected to purchase the Class G Certificates as provided below); - the Class D Certificateholders (other than Delta or any of its affiliates) will have the right to purchase all, but not less than all, of the Class G Certificates (unless the Policy Provider has elected to purchase the Class G Certificates as provided below) and to purchase all, but not less than all, of the Class C Certificates; and - whether or not the Class C Certificateholders or the Class D Certificateholders have purchased or elected to purchase the Class G Certificates, the Policy Provider (except in the event of a Policy 51 Provider Default), if it is then the Controlling Party, shall have the right to purchase all, but not less than all, of the Class G Certificates. Once the Policy Provider has purchased the Class G Certificates, the Class C Certificateholders and the Class D Certificateholders will no longer have the right to purchase the Class G Certificates. In each case the purchase price for a Class of Certificates will be equal to the Pool Balance of such Class plus accrued and undistributed interest thereon and Break Amount (if any) to the date of purchase, without any Make-Whole Amount but including any other amounts then due and payable to the Certificateholders of such Class. Such purchase right may be exercised by any Certificateholder of the Class or Classes entitled to such right. In each case, if prior to the end of the ten-day notice period, any other Certificateholder of the same Class notifies the purchasing Certificateholder that the other Certificateholder wants to participate in such purchase, then such other Certificateholder may join with the purchasing Certificateholder to purchase the Certificates pro rata based on the interest in the Trust held by each Certificateholder. (Trust Supplements, Section 7.01) PTC EVENT OF DEFAULT A "PTC Event of Default" with respect to any Class of Certificates means the failure to distribute within ten Business Days after the applicable Distribution Date either: - the outstanding Pool Balance of such Class of Certificates on the Final Legal Distribution Date for such Class (unless, in the case of the Class G Certificates, the Subordination Agent has made a drawing under the Policy in an aggregate amount sufficient to pay such outstanding Pool Balance and has distributed such amount to the related Trustee); or - interest scheduled for distribution on such Class of Certificates on any Distribution Date (unless in the case of the Class G Certificates, the Subordination Agent has made an Interest Drawing, or a withdrawal from the Primary Cash Collateral Account and/or Above-Cap Account, and/or a drawing under the Policy, in an amount sufficient to pay such interest and has distributed such amount to the Trustee entitled thereto). Any failure to make expected principal distributions with respect to any Class of Certificates on any Regular Distribution Date (other than the Final Legal Distribution Date) will not constitute a PTC Event of Default with respect to such Certificates. A PTC Event of Default with respect to the most senior outstanding Class of Certificates resulting from an Indenture Event of Default under all Indentures will constitute a Triggering Event. For a discussion of the consequences of the occurrence of a Triggering Event, see "Description of the Intercreditor Agreement -- Priority of Distributions." MERGER, CONSOLIDATION AND TRANSFER OF ASSETS Delta will be prohibited from consolidating with or merging into any other corporation or transferring substantially all of its assets as an entirety to any other person unless: - the successor or transferee entity is organized and validly existing under the laws of the United States or any state thereof or the District of Columbia; - the successor or transferee entity is, if and to the extent required under Section 1110 of the United States Bankruptcy Code (the "Bankruptcy Code") in order that the Loan Trustee continues to be entitled to any benefits of Section 1110 with respect to an Aircraft, a "citizen of the United States" (as defined in Title 49 of the United States Code relating to aviation (the "Transportation Code")) holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to Chapter 447 of the Transportation Code; 52 - the successor or transferee entity expressly assumes all of the obligations of Delta contained in the Basic Agreement and any Trust Supplement, the Indentures, and the Participation Agreements; - if the Aircraft are, at the time, registered with the FAA, the transferor or successor entity makes such filings and recordings with the FAA pursuant to the Transportation Code, or if the Aircraft are, at the time, not registered with the FAA, the transferor or successor makes such filings and recordings with the applicable aviation authority, as are necessary to evidence such consolidation, merger or transfer; and - Delta has delivered a certificate and an opinion or opinions of counsel indicating that such transaction, in effect, complies with such conditions. In addition, after giving effect to such transaction, no Indenture Event of Default shall have occurred and be continuing. (Basic Agreement, Section 5.02; Participation Agreements, Section 6.02) MODIFICATION OF THE PASS THROUGH TRUST AGREEMENTS AND CERTAIN OTHER AGREEMENTS Each Pass Through Trust Agreement contains provisions permitting Delta and the Trustee to enter into a supplement to such Pass Through Trust Agreement or, if applicable, permitting the execution of amendments or supplements to the Intercreditor Agreement or the Reference Agency Agreement or, with respect to the Pass Through Trust Agreement for the Class G Trust, any Liquidity Facility, the Policy and the Policy Provider Agreement, without the consent of the holders of any of the Certificates of such Trust (but, in the case of certain of the following relating to the Class G Trust, subject to the prior written consent of the Policy Provider) to, among other things: - evidence the succession of another corporation or entity to Delta and the assumption by such corporation or entity of Delta's obligations under such Pass Through Trust Agreement, the Intercreditor Agreement, the Reference Agency Agreement, any Liquidity Facility or the Policy Provider Agreement; - add to the covenants of Delta for the benefit of holders of such Certificates or surrender any right or power conferred upon Delta in such Pass Through Trust Agreement, the Intercreditor Agreement, the Reference Agency Agreement, any Liquidity Facility, the Policy or the Policy Provider Agreement; - to cure any ambiguity or correct any mistake or inconsistency in such Pass Through Trust Agreement, the Intercreditor Agreement, the Reference Agency Agreement, any Liquidity Facility, the Policy or the Policy Provider Agreement; - make or modify any other provision with respect to matters or questions arising under such Pass Through Trust Agreement, the Intercreditor Agreement, the Reference Agency Agreement, any Liquidity Facility, the Policy or the Policy Provider Agreement as Delta may deem necessary or desirable and that will not materially adversely affect the interests of the holders of such Certificates; - comply with any requirement of the SEC, any applicable law, rules or regulations of any exchange or quotation system on which the Certificates are listed (or to facilitate any listing of any certificates on any exchange or the quotation system) or of any regulatory body; - modify, eliminate or add to the provisions of such Pass Through Trust Agreement, the Intercreditor Agreement, any Liquidity Facility, the Policy or the Policy Provider Agreement to the extent necessary to continue the qualification of such Pass Through Trust Agreement (including any supplemental agreement), the Intercreditor Agreement, any Liquidity Facility, the Policy or the Policy Provider Agreement under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and add to such Pass Through Trust Agreement, the Intercreditor Agreement, the 53 Reference Agency Agreement, any Liquidity Facility, the Policy or the Policy Provider Agreement such other provisions as may be expressly permitted by the Trust Indenture Act; - provide for a successor Trustee under such Pass Through Trust Agreement and add to or change any of the provisions of such Pass Through Trust Agreement, the Intercreditor Agreement, the Reference Agency Agreement, any Liquidity Facility, the Policy or the Policy Provider Agreement as necessary to facilitate the administration of the Trusts under such Pass Through Trust Agreement by more than one Trustee or, as provided in the Intercreditor Agreement, to provide for multiple Liquidity Facilities for such Trust; - provide certain information to the Trustee as required in such Pass Through Trust Agreement; - add to or change the Basic Agreement and any Trust Supplement to facilitate the issuance of any Certificates in bearer form or to facilitate or provide for the issuance of any Certificates in global form in addition to or in place of Certificates in certificated form; - provide for the delivery of Certificates or any supplement to such Pass Through Trust Agreement in or by means of any computerized, electronic or other medium, including computer diskette; - correct or supplement the description of any property of any Trust; and - modify, eliminate or add to the provisions of such Pass Through Trust Agreement to reflect the substitution of a substitute aircraft for any Aircraft; provided, however, that no such supplement shall cause any Trust to become an association taxable as a corporation for U.S. federal income tax purposes. (Basic Agreement, Section 9.01) Each Pass Through Trust Agreement also contains provisions permitting the execution, with the consent of the holders of the Certificates of the related Trust evidencing fractional undivided interests aggregating not less than a majority in interest of such Trust, and, with respect to the Pass Through Trust Agreement for the Class G Trust, the Policy Provider, of supplemental agreements adding any provisions to or changing or eliminating any of the provisions of such Pass Through Trust Agreement, the Intercreditor Agreement, or with respect to the Pass Through Trust Agreement for the Class G Trust, any Liquidity Facility, the Policy or the Policy Provider Agreement to the extent applicable to such Certificateholders or modifying the rights of the Certificateholders under such Pass Through Trust Agreement, the Intercreditor Agreement, any Liquidity Facility, the Policy or the Policy Provider Agreement, except that no such supplemental agreement may, without the consent of the Policy Provider (with respect to the Pass Through Trust Agreement for the Class G Trust) and the holder of each outstanding Certificate adversely affected thereby: - reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee of payments on the Equipment Notes held in such Trust, or distributions in respect of any Certificate of such Trust, or change the date or place of any payment or change the coin or currency in which such Certificate is payable, or impair the right of any Certificateholder of such Trust to institute suit for the enforcement of any such payment when due; - permit the disposition of any Equipment Note held in such Trust, except as provided in such Pass Through Trust Agreement, the Intercreditor Agreement or any applicable Liquidity Facility; - alter the priority of distributions specified in the Intercreditor Agreement in a manner materially adverse to such Certificateholders; - reduce the percentage of the aggregate fractional undivided interests of the Trust provided for in such Pass Through Trust Agreement, the consent of the holders of which is required for any such supplemental agreement or for any waiver provided for in such Pass Through Trust Agreement; - cause such Trust to become an association taxable as a corporation for U.S. federal income tax purposes; or - to terminate or modify the Policy. 54 If a Trustee, as holder (or beneficial owner through the Subordination Agent) of any Equipment Note in trust for the benefit of the Certificateholders of the relevant Trust or as Controlling Party under the Intercreditor Agreement, receives (directly or indirectly through the Subordination Agent) a request for a consent to any amendment, modification, waiver or supplement under any Indenture, any Participation Agreement, any Equipment Note or any other related document, the Trustee will forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder of the relevant Trust registered on the register of such Trust as of the date of such notice and the Policy Provider. The Trustee will request from the Certificateholders or the Policy Provider, as the case may be, a direction as to: - whether or not to take or refrain from taking (or direct the Subordination Agent to take or refrain from taking) any action that a Noteholder or the Controlling Party has the option to take or direct; - whether or not to give or execute (or direct the Subordination Agent to give or execute) any waivers, consents, amendments, modifications or supplements as a Noteholder or as Controlling Party; and - how to vote (or direct the Subordination Agent to vote) any Equipment Note if a vote has been called for with respect thereto. (Section 10.01; Intercreditor Agreement, Section 8.01(b)) If Certificateholders are entitled to direct the Trustee and such a request for Certificateholder direction has been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note (or in directing the Subordination Agent in any of the foregoing): - other than as the Controlling Party, the Trustee will vote for or give consent to any such action with respect to such Equipment Note in the same proportion as that of (x) the aggregate face amount of all Certificates actually voted in favor of or for giving consent to such action by such direction of Certificateholders to (y) the aggregate face amount of all outstanding Certificates of the relevant Trust; and - as the Controlling Party, the Trustee will vote as directed in such Certificateholder direction by the Certificateholders evidencing fractional undivided interests aggregating not less than a majority in interest in the relevant Trust. (Basic Agreement, Section 10.01) For purposes of the preceding paragraph, a Certificate is deemed "actually voted" if the Certificateholder has delivered to the Trustee an instrument evidencing such Certificateholder's consent to such direction prior to one Business Day before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to certain rights of the Certificateholders under the relevant Pass Through Trust Agreement and subject to the Intercreditor Agreement, the Trustee may, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent (or direct the Subordination Agent to consent and notify the relevant Loan Trustee of such consent) to any amendment, modification, waiver or supplement under the relevant Indenture, Participation Agreement, Equipment Note or any other related document, if an Indenture Event of Default under any Indenture has occurred and is continuing, or if such amendment, modification, waiver or supplement will not materially adversely affect the interests of the Certificateholders. (Basic Agreement, Section 10.01) Pursuant to the Intercreditor Agreement, with respect to any Indenture at any given time, the Loan Trustee under such Indenture will be directed in taking, or refraining from taking, any action thereunder or with respect to the Equipment Notes issued under such Indenture by the Subordination Agent (as directed by the Controlling Party). Any such Trustee acting as Controlling Party will direct the Subordination Agent as such Trustee is directed by Certificateholders evidencing fractional undivided interests aggregating not less than a majority in interest in the relevant Trust. (Intercreditor Agreement, Section 2.06 and 8.01(b)) Notwithstanding the foregoing, no amendment, modification, consent or waiver of any Indenture, Equipment Note, Participation Agreement or other related document will, without the consent of the Primary Liquidity Provider, the Policy Provider and the Trustee of each Trust (other than any Trust all of the Certificates of which are held or beneficially owned by Delta and/or any of its affiliates) whose Certificateholders would be affected thereby (i) reduce the amount of principal or interest 55 payable by Delta under any Equipment Note issued under any Indenture or delay the timing of any such payment, (ii) create any lien with respect to any collateral prior to or pari passu with the lien of the related Indenture or deprive any holder of an Equipment Note issued under such Indenture of the benefit of the lien of such Indenture upon the related collateral, or (iii) reduce the percentage in principal amount of the outstanding Equipment Notes issued under any Indenture required to take or approve any action under such Indenture. (Intercreditor Agreement, Section 8.01(b)) See "-- Indenture Events of Default and Certain Rights Upon an Indenture Event of Default" for a description of the rights of the Certificateholders of each Trust to direct the respective Trustees. TERMINATION OF THE TRUSTS The obligations of Delta and the applicable Trustee with respect to a Trust will terminate upon the distribution to Certificateholders of such Trust of all amounts required to be distributed to them pursuant to the applicable Pass Through Trust Agreement and the disposition of all property held in such Trust. The applicable Trustee will mail to each Certificateholder of record of such Trust notice of the termination of such Trust, the amount of the proposed final payment and the proposed date for the distribution of such final payment for such Trust. The Final Distribution to any Certificateholder of such Trust will be made only upon surrender of such Certificateholder's Certificates at the office or agency of the applicable Trustee specified in such notice of termination. (Basic Agreement, Section 11.01) In the event that all of the Certificateholders do not surrender their Certificates for cancellation within six months after the date specified in such written notice, the applicable Trustee will give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution. No additional interest will accrue on the Certificates after the Distribution Date specified in the first written notice. In the event that any money held by a Trustee for the payment of distributions on the Certificates remains unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after sixty days' notice from Delta, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, such Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee. THE TRUSTEES The Trustee for each Trust initially will be U.S. Bank Trust National Association. The Trustee's address is U.S. Bank Trust National Association, 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention: Corporate Trust Division. With certain exceptions, the Trustee makes no representations as to the validity or sufficiency of the Basic Agreement, the Trust Supplements, the Certificates, the Equipment Notes, the Indentures, the Intercreditor Agreement, the Participation Agreements, any Liquidity Facility, the Policy, or other related documents. (Basic Agreement, Sections 7.04 and 7.15) The Trustee of any Trust will not be liable to the Certificateholders of such Trust for any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of a majority in face amount of outstanding Certificates of such Trust. Subject to certain provisions, the Trustee will be under no obligation to exercise any of its rights or powers under any Pass Through Trust Agreement at the request of any holders of Certificates issued thereunder unless there has been offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by such Trustee in exercising such rights or powers. (Basic Agreement, Section 7.03(e)) Each Pass Through Trust Agreement provides that the applicable Trustee in its individual or any other capacity may acquire and hold Certificates issued thereunder and, subject to certain conditions, may otherwise deal with Delta with the same rights it would have if it were not the Trustee. (Basic Agreement, Section 7.05) BOOK-ENTRY REGISTRATION; DELIVERY AND FORM GENERAL Each Class of New Class G Certificates will be represented by one or more fully registered global certificates ("Global Certificates"). Each global certificate will be deposited with the Trustee as custodian for DTC and registered in the name of Cede & Co. ("Cede"), the nominee of DTC. 56 DTC has informed Delta as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants ("DTC Participants") and facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entry changes in accounts of DTC Participants, thereby eliminating the need for physical movement of certificates. DTC participants include securities brokers and dealers, banks, trust companies and clearing corporations and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly ("Indirect Participants"). Delta expects that, pursuant to procedures established by DTC, (i) upon the issuance of the Global Certificates, DTC or its custodian will credit, on its internal system, the respective principal amount of the individual beneficial interests represented by such Global Certificates to the accounts of persons who have accounts with such depositary and (ii) ownership of beneficial interests in the Global Certificates will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of DTC Participants) and the records of DTC Participants (with respect to interests of persons other than DTC Participants). Ownership of beneficial interests in the Global Certificates will be limited to DTC Participants or persons who hold interests through DTC Participants. The laws of some states required that certain purchasers of securities take physical delivery of such securities. Such limits and such laws may limit the market for beneficial interests in the Global Certificates. So long as DTC or its nominee is the registered owner or holder of the Global Certificates, DTC or such nominee, as the case may be, will be considered the sole record owner or holder of the Class G Certificates represented by such Global Certificates for all purposes under the Class G Certificates and Class G Pass Through Trust Agreement. All references in this Prospectus to actions by the Class G Certificateholders shall refer to actions taken by DTC upon instructions from DTC Participants, and all references to distributions, notices, reports and statements to the Class G Certificateholders will refer, as the case may be, to distributions, notices, reports and statements to DTC or such nominee, as the registered holder of the Class G Certificates. No beneficial owners of an interest in the Global Certificates will be able to transfer that interest except in accordance with DTC's applicable procedures, in addition to those provided or under the Class G Pass Through Trust Agreement. Such beneficial owners of an interest in the Global Certificates, and registered owners of a Definitive Certificate, are referred to herein individually as a "Certificate Owner" and collectively as the "Certificate Owners." Under the rules, regulations and procedures creating and affecting DTC and its operations (the "Rules"), DTC is required to make book-entry transfers of Certificates among DTC Participants on whose behalf it acts with respect to the Certificates. Certificate Owners that are not DTC Participants but that desire to purchase, sell or otherwise transfer ownership of, or other interests in, Certificates may do so only through DTC Participants. DTC Participants and indirect participants with which Certificate Owners have accounts with respect to the Certificates, however, are required to make book-entry transfers on behalf of their respective customers. In addition, under the Rules, DTC is required to receive and transmit to the DTC Participants distributions of principal of, premium, if any, and interest with respect to the Certificates. Certificate Owners thus will receive all distributions of principal, premium, if any, and interest from the Trustee through DTC Participants or indirect participants, as the case may be. Under this book-entry system, Certificate Owners may experience some delay in their receipt of payments because such payments will be forwarded by the Trustee to Cede, as nominee for DTC, and DTC in turn will forward the payments to the appropriate DTC Participants in amounts proportionate to the principal amount of such DTC Participants' respective holdings of beneficial interests in the Certificates, as shown on the records of DTC or its nominee. Distributions by DTC Participants to indirect participants or Certificate Owners, as the case may be, will be the responsibility of such DTC Participants. 57 Unless and until Definitive Certificates are issued under the limited circumstances described herein, the only "Certificateholder" under the Basic Agreement will be Cede, as nominee of DTC. Certificate Owners therefore will not be recognized by the Trustee as Certificateholders, as such term is used in the Basic Agreement, and Certificate Owners will be permitted to exercise the rights of Certificateholders only indirectly through DTC and DTC Participants. DTC has advised Delta that it will take any action permitted to be taken by Certificateholders under the Basic Agreement only at the direction of one or more DTC Participants to whose accounts with DTC the Certificates are credited. Additionally, DTC has advised Delta that in the event any action requires approval by Certificateholders of a certain percentage of beneficial interest in each Trust, DTC will take such action only at the direction of and on behalf of DTC Participants whose holdings include undivided interests that satisfy any such percentage. DTC may take conflicting actions with respect to other undivided interests to the extent that such actions are taken on behalf of DTC Participants whose holdings include such undivided interests. Conveyance of notices and other communications by DTC to DTC Participants and by DTC Participants to indirect participants and to Certificate Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Because DTC can only act on behalf of DTC Participants, who in turn act on behalf of indirect participants, the ability of a Certificate Owner to pledge Certificates to persons or entities that do not participate in the DTC system, or to otherwise act with respect to such Certificates, may be limited due to the lack of a physical certificate for such Certificates. Payments of the principal of, Break Amount (if any), Make-Whole Amount (if any) and interest on the Global Certificates will be made to DTC or its nominee, as the case may be, as the registered owner thereof. Neither Delta, the Class G Trustee, nor any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Certificates or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Delta expects that DTC or in its nominee, upon receipt of any payment of principal, Break Amount (if any), Make-Whole Amount (if any) or interest in respect of the Global Certificates, will credit DTC Participants' accounts with payments in amounts proportionate to their respective beneficial ownership interests in the principal amount of such Global Certificates, as shown on the records of DTC or in its nominee. Delta also expects that payments by DTC Participants to owners of beneficial interests in such Global Certificates held through such DTC Participants will be governed by the standing instructions and customary practices of such DTC Participants. Such payments will be the responsibility of such DTC Participants. Neither Delta nor the Trustee nor any agent of Delta or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Certificates held by Cede, as nominee for DTC; for maintaining, supervising or reviewing any records relating to such beneficial ownership interests; or for the performance by DTC, any DTC Participant or any indirect participant of their respective obligations under the Rules or any other statutory, regulatory, contractual or customary procedures governing their obligations. The information contained in this Prospectus concerning DTC and its book-entry system has been obtained from sources Delta believes to be reliable, but Delta has not verified such information and takes no responsibility for the accuracy thereof. SAME-DAY SETTLEMENT AND PAYMENT As long as Certificates are registered in the name of DTC or its nominee, all payments made by Delta to the Loan Trustee under any Indenture will be in immediately available funds. Such payments, including the final distribution of principal with respect to the Certificates of any Trust, will be passed through to DTC in immediately available funds. 58 Any Certificates registered in the name of DTC or its nominee will trade in DTC's Same-Day Funds Settlement System until maturity, and secondary market trading activity in the Certificates will therefore be required by DTC to settle in immediately available funds. No assurance can be given as the effect, if any, of settlement in same day funds on trading activity in the Certificates. DEFINITIVE CERTIFICATES Interest in Global Certificates with respect to the Class G Certificates will be exchangeable or transferable, as the case may be, for Definitive Certificates only if (i) DTC advises the Class G Trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as depository with respect to such Certificates and the Class G Trustee is unable to locate a qualified successor, (ii) Delta, at its option, elects to terminate the book-entry system through DTC or (iii) after the occurrence of certain events of default or other events specified in the Class G Pass Through Trust Agreement, the Class G Certificateholders with fractional undivided interests aggregating not less than a majority in interest in the Class G Trust advise the Class G Trustee, Delta and DTC through DTC Participants in writing that the continuation of a book-entry system through DTC (or a successor thereto) is no longer in the Certificateholders' best interest. Upon the occurrence of any event described in the immediately preceding paragraph, the Class G Trustee will be required to notify all Class G Certificateholders through DTC of the availability of Definitive Certificates. Upon surrender by DTC of the certificate representing the Global Certificates and receipt of instructions for re-registration, the Class G Trustee will reissue the applicable Certificate as Definitive Certificates to Class G Certificateholders. Distribution of principal, Break Amount (if any), Make-Whole Amount (if any) and interest with respect to the Class G Certificates will thereafter be made by the Class G Trustee directly in accordance with the procedures set forth in the Class G Pass Through Trust Agreement, to holders in whose names the Definitive Certificates were registered at the close of business on the applicable record date. Such distributions will be made by check mailed to the address of such holder as it appears on the register maintained by the Class G Trustee. The final payment on any Class G Certificate, however, will be made only upon presentation and surrender of the Class G Certificate at the office or agency specified in the notice of final distribution to the Class G Certificateholders. DESCRIPTION OF LIQUIDITY FACILITIES The following summary describes certain terms of the Liquidity Facilities and certain provisions of the Intercreditor Agreement relating to the Liquidity Facilities. There is no liquidity facility for the Class C and Class D Certificates. Therefore, the statements under this caption apply only to the Class G Trust and any reference to a Liquidity Facility should be read to exclude the Class C and Class D Trusts. The summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Liquidity Facilities and the Intercreditor Agreement, which have been filed as exhibits to the Registration Statement. Copies are available as set forth under "Where You Can Find More Information." The term "Liquidity Facilities" refers to the Primary Liquidity Facility and the Above-Cap Liquidity Facility. PRIMARY LIQUIDITY FACILITY GENERAL The primary liquidity provider (the "Primary Liquidity Provider") entered into a revolving credit agreement (the "Primary Liquidity Facility") with the Subordination Agent with respect to the Class G Trust. Under the Primary Liquidity Facility, the Primary Liquidity Provider will, if necessary, make one or more advances ("Interest Drawings") to the Subordination Agent to be used solely to pay interest on the Class G Certificates when due, subject to certain limitations. The Primary Liquidity Facility, together with the amounts in the Above-Cap Account, if any, are expected to be sufficient to pay interest on the 59 Class G Certificates on up to six consecutive quarterly Regular Distribution Dates at the Stated Interest Rate for the Class G Certificates. If interest payment defaults occur which exceed the amount covered by or available under the Primary Liquidity Facility and funds available in the Above-Cap Account, the Class G Certificateholders will bear their allocable share of the deficiencies to the extent that there are no other sources of funds (including funds from the Policy). Although Landesbank Baden-Wurttemberg is the initial Primary Liquidity Provider, it may be replaced by one or more other entities under certain circumstances. DRAWINGS The initial amount available under the Primary Liquidity Facility as of the issuance of the Old Class G Certificates was $75,217,115.51 Except as otherwise provided below, the Primary Liquidity Facility enables the Subordination Agent to make Interest Drawings thereunder promptly on or after any Regular Distribution Date in order to make interest distributions then scheduled for the Class G Certificates at the Stated Interest Rate for the Class G Trust to the extent that the amount (including any required payments by the Policy Provider following a Policy Provider Election), if any, available to the Subordination Agent on such Regular Distribution Date is not sufficient to pay such interest. The maximum amount available to be drawn under the Primary Liquidity Facility on any Regular Distribution Date to fund any shortfall of interest on the Class G Certificates will not exceed the then Maximum Available Commitment under the Primary Liquidity Facility. The "Maximum Available Commitment" at any time is an amount equal to the then Required Amount of the Primary Liquidity Facility less the aggregate amount of each Interest Drawing then outstanding under the Primary Liquidity Facility at such time, provided that following a Downgrade Drawing or a Final Drawing under the Primary Liquidity Facility, the Maximum Available Commitment under such Liquidity Facility will be zero. "Required Amount" means, on any day, the aggregate amount sufficient to pay interest, on the Pool Balance of the Class G Certificates, at the Capped Interest Rate, on the six successive quarterly Regular Distribution Dates immediately following such date or if such date is a Regular Distribution Date, on such date and the succeeding five Regular Distribution Dates, in each case calculated without regard to expected future payments of principal on such Certificates. The Pool Balance for purposes of the definition of Required Amount, if any Policy Provider Election has been made, shall be deemed to be reduced by the amount (if positive) by which (i) the outstanding principal balance of each Series G Equipment Note in respect of which such Policy Provider Election has been made shall exceed (ii) the amount of any Policy Drawing previously paid by the Policy Provider in respect of principal of such Series G Equipment Note. The initial "Capped Interest Rate" was 12.75% per annum as of the issuance of the Old Class G Certificates. As of the issuance of the New Class G Certificates, the Capped Interest Rate will decrease to 12.50% per annum. The Primary Liquidity Facility does not provide for drawings thereunder to pay for principal of, Make-Whole Amount (if any) or Break Amount (if any) on the Class G Certificates or any interest with respect to the Class G Certificates in excess of the Stated Interest Rate for the Class G Certificates, or to pay principal of or interest, Break Amount or Make-Whole Amount on the Certificates of any other Class. The Primary Liquidity Facility does not provide for drawings thereunder to pay interest with respect to the Class G Certificates in excess of an amount equal to six quarterly installments of interest calculated at the Capped Interest Rate. (Primary Liquidity Facility, Section 2.02; Intercreditor Agreement, Section 3.06) Each payment by the Primary Liquidity Provider will reduce by the same amount the Maximum Available Commitment under the Primary Liquidity Facility, subject to reinstatement as hereinafter described. With respect to any Interest Drawings, upon reimbursement of the Liquidity Provider in full or in part for the amount of such Interest Drawings plus accrued interest thereon, the Maximum Available Commitment under the Primary Liquidity Facility will be reinstated by the amount reimbursed but not to exceed the then Required Amount of the Primary Liquidity Facility; provided, however, the Primary 60 Liquidity Facility will not be so reinstated at any time if (i) a Liquidity Event of Default has occurred and is continuing and (ii) less than 65% of the then aggregate outstanding principal amount of all Equipment Notes are Performing Equipment Notes. Any amounts paid by the Policy Provider to the Primary Liquidity Provider as described in "Description of the Intercreditor Agreement -- Intercreditor Rights -- Controlling Party" will not reinstate the Primary Liquidity Facility, but any reimbursement of such amounts received by the Policy Provider under the distribution provisions of the Intercreditor Agreement will reinstate the Primary Liquidity Facility to the extent of such reimbursement unless (i) a Liquidity Event of Default shall have occurred and be continuing and (ii) less than 65% of the then aggregate outstanding principal amount of all Equipment Notes are Performing Equipment Notes. With respect to any other drawings under the Primary Liquidity Facility, amounts available to be drawn thereunder are not subject to reinstatement. (Primary Liquidity Facility, Section 2.02(a); Intercreditor Agreement, Section 3.06(g)). Following each reduction of the Pool Balance for the Class G Trust, the Required Amount of the Primary Liquidity Facility will be reduced automatically to an amount sufficient to pay interest on the Class G Pool Balance on the next six successive quarterly Regular Distribution Dates (without regard to expected future distributions of principal of such Certificates) at the Capped Interest Rate for the Class G Trust. (Primary Liquidity Facility, Section 2.04) The Required Amount of the Primary Liquidity Facility will also be reduced upon a reduction of the Capped Interest Rate. "Performing Equipment Note" means an Equipment Note issued pursuant to an Indenture with respect to which no payment default has occurred and is continuing (without giving effect to any acceleration); provided that in the event of a bankruptcy proceeding in which Delta is a debtor under the Bankruptcy Code, (i) any payment default occurring before the date of the order for relief for such proceedings shall not be taken into consideration during the 60-day period under Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer period as may apply under Section 1110(b) of the Bankruptcy Code) (the "Section 1110 Period"), (ii) any payment default occurring after the date of the order for relief in such proceeding will not be taken into consideration if such payment default is cured under Section 1110(a)(2)(B) of the Bankruptcy Code before the later of 30 days after the date of such default or the expiration of the Section 1110 Period and (iii) any payment default occurring after the Section 1110 Period will not be taken into consideration if such payment default is cured before the end of the grace period, if any, set forth in the related Indenture. (Intercreditor Agreement, Section 1.01) REPLACEMENT OF PRIMARY LIQUIDITY FACILITY If at any time the short-term unsecured debt rating of the Primary Liquidity Provider issued by Moody's or the short-term issuer credit rating of the Primary Liquidity Provider issued by Standard & Poor's (or if the Primary Liquidity Provider does not have a short-term unsecured debt rating or short- term issuer credit rating, as applicable, issued by Moody's or Standard & Poor's, the long-term unsecured debt rating or long-term issuer credit rating of the Primary Liquidity Provider issued by such Rating Agency) is lower than the Threshold Rating, the Primary Liquidity Facility may be replaced by a Replacement Primary Liquidity Facility. If the Primary Liquidity Facility is not so replaced with a Replacement Primary Liquidity Facility within 10 days after such downgrading, the Subordination Agent will draw the then Maximum Available Commitment under the Primary Liquidity Facility (the "Downgrade Drawing"). The Subordination Agent will deposit the proceeds of any Downgrade Drawing into a primary cash collateral account (the "Primary Cash Collateral Account") for the Class G Certificates and will use these proceeds for the same purposes and under the same circumstances and subject to the same conditions as cash payments of Interest Drawings under the Primary Liquidity Facility would be used. (Primary Liquidity Facility, Section 2.02(c); Intercreditor Agreement, Section 3.06(c)) A "Replacement Primary Liquidity Facility" for the Primary Liquidity Facility will mean an irrevocable revolving credit agreement (or agreements) in substantially the form of the replaced Primary Liquidity Facility, including reinstatement provisions, or in such other form (which may include a letter of credit, surety bond, financial insurance policy or guaranty) as will permit the Rating Agencies to confirm in writing their respective ratings then in effect for the Class G Certificates (before downgrading of such ratings, if any, as a result of the occurrence of a Downgrade Event) without regard to the Policy, to be 61 consented to by the Policy Provider, which consent shall not be unreasonably withheld or delayed, in a face amount (or in an aggregate face amount) equal to the Required Amount, and issued by a person (or persons) having debt ratings issued by both Rating Agencies that are equal to or higher than the Threshold Rating. (Intercreditor Agreement, Section 1.01) The provider of any Replacement Primary Liquidity Facility will have the same rights (including, without limitation, priority distribution rights and rights as Controlling Party) under the Intercreditor Agreement as the replaced Primary Liquidity Provider. "Threshold Rating" means (i) a short-term unsecured debt rating of P-1 in the case of Moody's and a short-term issuer credit rating of A-1 in the case of Standard & Poor's, and (ii) in the case of any entity that does not have a short-term rating from either or both of such rating agencies, then in lieu of such short-term rating, a long-term unsecured debt rating of A1 in the case of Moody's and a long-term issuer credit rating of A+ in the case of Standard & Poor's. The initial Primary Liquidity Facility provides that the Primary Liquidity Provider's obligations thereunder will expire on the earliest of: - the 15th day after the Final Legal Distribution Date for the Class G Certificates; - the date on which the Subordination Agent delivers to the Primary Liquidity Provider a certification that Final Distributions on all of the Class G Certificates have been paid in full or provision has been made for such payment; - the date on which the Subordination Agent delivers to the Primary Liquidity Provider a certification that a Replacement Primary Liquidity Facility has been substituted for the Primary Liquidity Facility; - the fifth Business Day following receipt by the Subordination Agent of a Termination Notice from the Primary Liquidity Provider (see "-- Liquidity Events of Default"); and - the date on which no amount is or may (including by reason of reinstatement) become available for drawing under the Primary Liquidity Facility. The initial Primary Liquidity Facility provides that such facility will continue until 15 days after the Final Legal Distribution Date. However, as discussed herein, the initial Primary Liquidity Facility may be replaced prior to such time by a Replacement Liquidity Facility. If the initial Primary Liquidity Facility is replaced by a Replacement Primary Liquidity Facility, such Replacement Primary Liquidity Facility may or may not extend until 15 days after the Final Legal Distribution Date. The Intercreditor Agreement will provide for the replacement of the Replacement Primary Liquidity Facility if such Replacement Primary Liquidity Facility is scheduled to expire earlier than 15 days after the Final Legal Distribution Date for the Class G Certificates and such Replacement Primary Liquidity Facility is not extended at least 25 days prior to its then scheduled expiration date. If such Replacement Primary Liquidity Facility is not so extended or replaced by the 25th day prior to its then scheduled expiration date, the Subordination Agent shall request a drawing in full up to the then Maximum Available Commitment under such Replacement Primary Liquidity Facility (the "Non-Extension Drawing"). The Subordination Agent will hold the proceeds of the Non-Extension Drawing in the Primary Cash Collateral Account as cash collateral to be used for the same purposes and under the same circumstances, and subject to the same conditions, as cash payments of Interest Drawings under such Replacement Primary Liquidity Facility would be used. (Intercreditor Agreement, Section 3.06(d)) Subject to certain limitations, Delta may, at its option, arrange for a Replacement Primary Liquidity Facility to replace the Primary Liquidity Facility (including without limitation any Replacement Primary Liquidity Facility described in the following sentence). If a Replacement Primary Liquidity Facility is provided at any time after a Downgrade Drawing or a Non-Extension Drawing under the initial Primary Liquidity Facility or any Replacement Primary Liquidity Facility, the funds with respect to the Primary Liquidity Facility or such Replacement Primary Liquidity Facility on deposit in the Primary Cash Collateral Account will be returned to the Primary Liquidity Provider being replaced. (Intercreditor Agreement, Section 3.06(e)) 62 Upon receipt by the Subordination Agent of a Termination Notice with respect to the Primary Liquidity Facility from the Primary Liquidity Provider, the Subordination Agent will request a final drawing (a "Final Drawing") under the Primary Liquidity Facility in an amount equal to the then Maximum Available Commitment thereunder. The Subordination Agent will hold the proceeds of the Final Drawing in the Primary Cash Collateral Account as cash collateral to be used for the same purposes and under the same circumstances, and subject to the same conditions, as cash payments of Interest Drawings under the Primary Liquidity Facility would be used. (Primary Liquidity Facility, Section 2.02(d); Intercreditor Agreement, Section 3.06(i)) Drawings under the Primary Liquidity Facility will be made by delivery by the Subordination Agent of a certificate in the form required by the Primary Liquidity Facility. Upon receipt of such a certificate, the Primary Liquidity Provider is obligated to make payment of the drawing requested thereby in immediately available funds. Upon payment by the Primary Liquidity Provider of the amount specified in any drawing under the Primary Liquidity Facility, the Primary Liquidity Provider will be fully discharged of its obligations under the Primary Liquidity Facility with respect to such drawing and will not thereafter be obligated to make any further payments under the Primary Liquidity Facility in respect of such drawing to the Subordination Agent or any other person. REIMBURSEMENT OF DRAWINGS The Subordination Agent must reimburse amounts drawn under the Primary Liquidity Facility by reason of an Interest Drawing, Final Drawing, Downgrade Drawing or Non-Extension Drawing and interest thereon, but only to the extent that the Subordination Agent has funds available therefor. INTEREST DRAWINGS AND FINAL DRAWINGS Amounts drawn under the initial Primary Liquidity Facility by reason of an Interest Drawing or Final Drawing (each, a "Drawing") will be immediately due and payable, together with interest on the amount of such Drawing. From the date of such Drawing to (but excluding) the third business day following the Primary Liquidity Provider's receipt of the notice of such Drawing, interest will accrue at the Base Rate plus 1.70% per annum. Thereafter, interest will accrue at the Liquidity Facility LIBOR for the applicable interest period plus 1.70% per annum. "Base Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for each day of the period for which the Base Rate is to be determined (or, if such day is not a business day, for the next preceding business day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day that is a business day, the average of the quotations for such day for such transactions received by the Primary Liquidity Provider from three Federal funds brokers of recognized standing selected by it (and reasonably satisfactory to Delta) plus one quarter of one percent (0.25%) per annum. "Liquidity Facility LIBOR" means, with respect to any interest period, the rate per annum at which U.S. dollars are offered in the London interbank market as shown on Page 3750 of the Telerate Systems Incorporated screen service (or any successor thereto), at approximately 11:00 A.M. (London time) two London Banking Days before the first day of such interest period, for a period comparable to such interest period, or if such rate is not available, a rate per annum determined by certain alternative methods. "London Banking Day" means any day on which commercial banks are open for general business in London, England. 63 DOWNGRADE DRAWINGS AND NON-EXTENSION DRAWINGS The amount drawn under the Primary Liquidity Facility by reason of a Downgrade Drawing or a Non-Extension Drawing and deposited in the Primary Cash Collateral Account will be treated as follows: - such amount will be released on any Distribution Date to the Primary Liquidity Provider to pay any obligations to the Primary Liquidity Provider to the extent such amount exceeds the Required Amount; - any portion of such amount withdrawn from the Primary Cash Collateral Account to pay interest distributions on the Class G Certificates will be treated in the same way as Interest Drawings; and - the balance of such amount will be invested in certain specified eligible investments. Any Downgrade Drawing under the initial Primary Liquidity Facility, other than any portion thereof applied to the payment of interest distributions on the Class G Certificates, will bear interest (x) subject to clause (y) below, in an amount equal to the investment earnings on amounts deposited in the Primary Cash Collateral Account and (y) from and after the date, if any, on which it is converted into a Final Drawing as described below under "-- Liquidity Events of Default," at a rate equal to LIBOR for the applicable interest period plus 1.70% per annum. In addition, prior to conversion to a Final Drawing, a commitment fee will continue to be payable on the amounts on deposit in the Primary Cash Collateral Account. LIQUIDITY EVENTS OF DEFAULT Events of default under the Primary Liquidity Facility (each, a "Liquidity Event of Default") consist of: - the acceleration of all the Equipment Notes; or - certain bankruptcy or similar events involving Delta. (Primary Liquidity Facility, Section 1.01) If (i) any Liquidity Event of Default under the Primary Liquidity Facility has occurred and is continuing and (ii) less than 65% of the aggregate outstanding principal amount of all Equipment Notes are Performing Equipment Notes, the Primary Liquidity Provider may, in its discretion, give a notice of termination of the Primary Liquidity Facility (a "Termination Notice"). The Termination Notice will have the following consequences: - the Primary Liquidity Facility will expire on the fifth Business Day after the date on which such Termination Notice is received by the Subordination Agent; - the Subordination Agent will request promptly, and the Primary Liquidity Provider will honor, a Final Drawing thereunder in an amount equal to the then Maximum Available Commitment thereunder; - any Drawing remaining unreimbursed as of the date of termination will be converted automatically into a Final Drawing under the Primary Liquidity Facility; and - all amounts owing to the Primary Liquidity Provider will become immediately due and payable. Notwithstanding the foregoing, the Subordination Agent will be obligated to pay amounts owing to the Primary Liquidity Provider only to the extent of funds available therefor after giving effect to the payments in accordance with the provisions set forth under "Description of the Intercreditor Agreement -- Priority of Distributions." (Primary Liquidity Facility, Section 6.01) Upon the circumstances described under "Description of the Intercreditor Agreement -- Intercreditor Rights," the Primary Liquidity Provider may become the Controlling Party with respect to the exercise of remedies under the Indentures. (Intercreditor Agreement, Section 2.06(c)) 64 PRIMARY LIQUIDITY PROVIDER The initial Primary Liquidity Provider for the Class G Trust is Landesbank Baden-Wurttemberg, a bank established in Germany as a public law institution with legal capacity (Rechtsfahige Anstalt des Offentlichen Rechts). Landesbank Baden-Wurttemberg has short-term debt rating of P-1 from Moody's and a short-term issuer credit rating of A-1+ from Standard & Poor's, and a long-term debt rating of Aaa from Moody's and a long term issuer credit rating of AAA from Standard & Poor's. ABOVE-CAP LIQUIDITY FACILITY GENERAL The above-cap liquidity provider (the "Above-Cap Liquidity Provider" and, together with the Primary Liquidity Provider, the "Liquidity Providers") entered into an irrevocable interest rate cap agreement with the Subordination Agent with respect to the Class G Trust (the "Above-Cap Liquidity Facility"). PAYMENTS Under the Above-Cap Liquidity Facility, subject to conditions set forth therein, the Above-Cap Liquidity Provider will make payments on any Distribution Date if (i) after giving effect to the provisions of the Intercreditor Agreement (but without regard to drawings under the Primary Liquidity Facility or withdrawals from the Primary Cash Collateral Account or Above-Cap Account), the Subordination Agent does not have sufficient funds for the payment of interest on the Class G Certificates, and (ii) then effective LIBOR exceeds the Capped LIBOR, in an amount (an "Above-Cap Payment") equal to (regardless of whether any portion of such amount has been or is being funded by the Primary Liquidity Provider as an Interest Drawing) the product of (x) the excess of LIBOR over the Capped LIBOR, multiplied by (y) the Pool Balance of the Class G Certificates, multiplied by (z) actual days elapsed in the applicable interest period divided by 360. An Above-Cap Payment under the Above-Cap Liquidity Facility will be made to the Subordination Agent, which will immediately deposit such Above-Cap Payment in the Above-Cap Account to be available for withdrawals as described in "-- Above-Cap Account" below. The Above-Cap Liquidity Facility will be available to make payments only as long as the Primary Liquidity Facility is available to be drawn or there are amounts available to be withdrawn in the Primary Cash Collateral Account or the Above-Cap Account. The "Capped LIBOR" is 11.75% per annum. The Above-Cap Liquidity Facility does not provide for payments thereunder to pay, directly or indirectly, principal of, Break Amount or Make-Whole Amount on, the Class G Certificates or principal of, or interest, Break Amount or Make-Whole Amount on, the Certificates of any other Class. (Intercreditor Agreement, Section 3.6) The Subordination Agent will have no obligation to reimburse the Above-Cap Liquidity Provider for any Above-Cap Payment. EARLY TERMINATION If at any time (i) the Above-Cap Liquidity Provider (or, in the case of the initial Above-Cap Liquidity Facility, the Above-Cap Liquidity Guarantor) fails to meet the Threshold Rating, (ii) in the case of the initial Above-Cap Liquidity Facility, the Above-Cap Liquidity Guarantor's guarantee of the initial Above-Cap Liquidity Provider's obligations thereunder becomes invalid or unenforceable, or (iii) certain other events relating to certain changes in law or other circumstances occur, then the Above-Cap Liquidity Facility may be replaced by a Replacement Above-Cap Liquidity Facility. If the Above-Cap Liquidity Facility is not so replaced within ten days after an event specified in clause (i) or (ii) above, or within 20 days after an event specified in clause (iii) above, the Above-Cap Liquidity Provider will pay the Subordination Agent for deposit into an account (the "Above-Cap Reserve Account") 65 for the benefit of the Class G Certificates an amount in cash (the "Above-Cap Reserve Amount") equal to the product of: - 1.528, multiplied by - 20% per annum minus Capped LIBOR, multiplied by - the Pool Balance of the Class G Certificates, plus all other unpaid amounts then due under the Above-Cap Liquidity Facility. Upon such payment, the Above-Cap Liquidity Facility will terminate. The Above-Cap Liquidity Facility may be terminated upon the occurrence of certain other specified events with respect to the Above-cap Liquidity Provider without the right of replacement and upon the occurrence of any such event, the Above-Cap Liquidity Provider will be obligated to pay the Above-Cap Reserve Amount into the Above-Cap Reserve Account. A "Replacement Above-Cap Liquidity Facility" for the Above-Cap Liquidity Facility will mean an irrevocable interest rate cap agreement (or agreements) in substantially the form of the replaced Above-Cap Liquidity Facility or in such other form as will permit the Rating Agencies to confirm in writing their respective ratings then in effect for the Class G Certificates (without regard to the Policy and before downgrading of such ratings, if any, as a result of the downgrading of the Above-Cap Liquidity Provider) and issued by a person (or persons) having ratings issued by each of Moody's and Standard & Poor's that are equal to or higher than the Threshold Rating and which person shall be consented to by the Policy Provider (which consent shall not be unreasonably withheld or delayed). (Intercreditor Agreement, Section 1.01) Amounts will be withdrawn from the Above-Cap Reserve Account and deposited in the Above-Cap Account as needed, to be used for the same purposes and under the same circumstances, and subject to the same conditions, as Above-Cap Payments under the Above-Cap Liquidity Facility (were the Above-Cap Liquidity Facility still in effect) would be used. Cash deposited into the Above-Cap Reserve Account will be invested in certain specified eligible investments. The Above-Cap Liquidity Facility provides that the Above-Cap Liquidity Provider's obligations thereunder will expire on the earlier of the first Business Day after (i) the Final Legal Distribution Date for the Class G Certificates and (ii) the date of payment in full of Final Distributions with respect to the Class G Certificates. ABOVE-CAP ACCOUNT The Subordination Agent will maintain an account for the Class G Trust (the "Above-Cap Account") into which Above-Cap Payments made by the Above-Cap Provider will be deposited. If, on any Distribution Date, after giving effect to the subordination provisions of the Intercreditor Agreement and after giving effect to any Interest Drawing under the Primary Liquidity Facility or withdrawals from the Primary Cash Collateral Account, there are insufficient funds available to the Subordination Agent to pay interest on the Class G Certificates (regardless of whether LIBOR is lower or higher than Capped LIBOR), the Subordination Agent shall make a withdrawal from the Above-Cap Account to the extent funds are available in such Above-Cap Account (after giving effect to any Above-Cap Payment or any equivalent transfer required from the Above-Cap Reserve Account) to fund such shortfall. Amounts deposited into the Above-Cap Account are not available to pay principal of or any Make-Whole Amount on, or Break Amount (if any) with respect to, the Class G Certificates. On the earlier of the first Business Day after (i) the Final Legal Distribution Date for the Class G Trust and (ii) the date of payment in full of Final Distributions with respect to the Class G Certificates, the Subordination Agent will pay to the Above-Cap Liquidity Provider an amount equal to the sum of the amounts remaining in the Above-Cap Account and the Above-Cap Reserve Account, if any. 66 Amounts available under the Above-Cap Liquidity Facility, together with the maximum amount of Interest Drawings available under the Primary Liquidity Facility, are expected to be sufficient to pay interest (calculated at the Stated Interest Rate applicable to the Class G Certificates) on the Class G Certificates on up to six consecutive Regular Distribution Dates (without regard to any expected future payments of principal of such Certificates). Notwithstanding the subordination provisions of the Intercreditor Agreement, only the holders of the Class G Certificates will be entitled to receive and retain the proceeds of withdrawals from the Above-Cap Account. ABOVE-CAP LIQUIDITY PROVIDER The initial Above-Cap Liquidity Provider for the Class G Trust is Merrill Lynch Capital Services, Inc. The obligations of the initial Above-Cap Liquidity Provider under the Above-Cap Liquidity Facility are guaranteed by its parent company, Merrill Lynch & Co., Inc. (the "Above-Cap Liquidity Guarantor"). The Above-Cap Liquidity Guarantor has a short-term unsecured debt rating of P-1 from Moody's and a short-term issuer debt rating of A-1 from Standard & Poor's. 67 DESCRIPTION OF THE POLICY AND THE POLICY PROVIDER AGREEMENT The following summary describes certain terms of the Policy and certain provisions of the Policy Provider Agreement. The summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Policy, which has been filed as an exhibit to the Registration Statement. Copies are available as set forth under "Where You Can Find More Information." THE POLICY The Policy Provider issued a certificate guaranty insurance policy (the "Policy") in favor of the Subordination Agent, for the benefit of the holders of the Class G Certificates, and the Primary Liquidity Provider, with respect to certain interest payments. The Policy does not cover any amounts payable on the Class C or Class D Certificates. The Intercreditor Agreement directs the Subordination Agent to make a drawing under the Policy under the following five circumstances: INTEREST DRAWINGS If on any Regular Distribution Date (other than the Final Legal Distribution Date), after giving effect to - the application of funds in accordance with the priorities set forth under "Description of the Intercreditor Agreement -- Priority of Distributions," - any drawings under the Primary Liquidity Facility in respect of interest due on the Class G Certificates, - any withdrawal of funds from the Primary Cash Collateral Account in respect of such interest, and - any withdrawal from the Above-Cap Account in respect of such interest, the Subordination Agent does not then have sufficient funds available for the payment of all amounts due and owing in respect of accrued and unpaid interest on the Pool Balance of the Class G Certificates at the Stated Interest Rate for such Class of Certificates, the Subordination Agent is to request a Policy Drawing under the Policy in an amount sufficient to enable the Subordination Agent to pay such interest. PROCEEDS DEFICIENCY DRAWING If the Subordination Agent receives a Special Payment consisting of proceeds of the Disposition of any Defaulted Series G Equipment Note or Collateral under (and as defined in) the related Indenture, on any Business Day elected by the Subordination Agent upon 20 days' notice to the Policy Provider, the Policy Provider will pay, after giving effect to the application of any Disposition proceeds and (if such Disposition occurs prior to a Policy Provider Election with respect to such Defaulted Series G Equipment Note) Prior Funds, the amount, if any, required to reduce the Pool Balance of such Class by an amount equal to the outstanding principal amount of such Defaulted Series G Equipment Note (less the amount of any Policy Drawings previously paid by the Policy Provider in respect of principal of such Defaulted Series G Equipment Note) plus accrued and unpaid interest from the immediately preceding Regular Distribution Date on the amount of such reduction. NO PROCEEDS DRAWING On the first Business Day (which shall be a Special Distribution Date) that is 21 months after the last date on which full payment was made on a Series G Equipment Note as to which there has subsequently been a failure to pay principal or that has been accelerated, if on or before such day there has not previously been a proceeds deficiency drawing as described in the preceding paragraph with respect to such Equipment Note, then the Subordination Agent will request a drawing under the Policy for the Class G Trust in an amount equal to the then outstanding principal amount of such Defaulted Series G Equipment Note plus accrued and unpaid interest thereon at the Stated Interest Rate from the immediately preceding Regular Distribution Date. The Subordination Agent will give prompt notice to 68 each Trustee, Delta, the Primary Liquidity Provider and the Policy Provider establishing the Special Distribution Date, which notice will be given not less than 25 days prior to such Special Distribution Date. After the payment by the Policy Provider in full of the requested drawing, the Subordination Agent will have no right to make any further drawing under the Policy in respect of the Defaulted Series G Equipment Note except for an Avoidance Drawing as described below. Notwithstanding the foregoing, at the end of any such 21-month period, so long as no Policy Provider Default has occurred and is continuing, the Policy Provider may, elect by giving notice to the Subordination Agent at least five days prior to the end of such 21-month period (the "Policy Provider Election") instead to pay - on such Special Distribution Date an amount equal to the scheduled principal and interest payable but not paid on the Defaulted Series G Equipment Note (without regard to the acceleration thereof) during such 21-month period (after giving effect to the application of funds received from the Primary Liquidity Facility, the Primary Cash Collateral Account and the Above-Cap Account) and - thereafter, on each Regular Distribution Date, an amount equal to the scheduled principal and interest payable on the Defaulted Series G Equipment Note (without regard to any acceleration thereof or any funds available under the Primary Liquidity Facility, the Primary Cash Collateral Account or the Above-Cap Account) until the establishment of an Election Distribution Date or a Special Distribution Date. Following a Policy Provider Election, on any Business Day (which shall be a Special Distribution Date) elected by the Policy Provider upon 20 days' notice to the Subordination Agent, the Policy Provider may (notwithstanding the Policy Provider Election) request the Subordination Agent to, and the Subordination Agent shall, make a Policy Drawing for the Class G Trust for an amount equal to the then outstanding principal balance of the Defaulted Series G Equipment Note (less any Policy Drawing previously paid by the Policy Provider in respect of principal of such Defaulted Series G Equipment Note) and accrued and unpaid interest thereon at the Stated Interest Rate for the Class G Certificates from the immediately preceding Regular Distribution Date to such Special Distribution Date. Further, after a Policy Provider Election, following the occurrence and continuation of a Policy Provider Default, the Subordination Agent will be required on a Business Day specified by the Subordination Agent upon 20 days' notice to the Policy Provider (such specified Business Day, an "Election Distribution Date," which shall be a Special Distribution Date) to make a Policy Drawing for the Class G Trust for an amount equal to the then outstanding principal balance of the Defaulted Series G Equipment Note (less any Policy Drawings previously paid by the Policy Provider in respect of principal of such Equipment Note) and accrued and unpaid interest thereon at the Stated Interest Rate for the Class G Certificates from the immediately preceding Regular Distribution Date to such Election Distribution Date. Regardless of whether or not the Policy Provider makes a Policy Provider Election, the Policy Provider shall from and after the end of the 21-month period honor drawings by the Primary Liquidity Provider in respect of the payment of interest accruing on the outstanding drawings of the Primary Liquidity Facility from and after the end of such 21-month period as and when such interest becomes due in accordance with the Primary Liquidity Facility. Any amendment or modification of the Policy Provider's obligations to make payments to the Primary Liquidity Provider requires the consent of the Primary Liquidity Provider. FINAL POLICY DRAWING If, after giving effect to the application of any Prior Funds, the Subordination Agent does not have sufficient funds available on the Final Legal Distribution Date of the Class G Certificates for the payment in full of the Final Distribution (calculated as at such date but excluding any unpaid Break Amount or Make-Whole Amount) on the Class G Certificates, the Subordination Agent shall request a Policy 69 Drawing in an amount sufficient to enable the Subordination Agent to pay the Final Distribution (calculated as at such date but excluding any unpaid Break Amount or Make-Whole Amount or interest thereon) on the Class G Certificates. AVOIDANCE DRAWING If at any time the Subordination Agent has actual knowledge of the issuance of any Order prior to the expiration of the Policy, the Subordination Agent will give prompt notice to each Trustee, Delta, each Liquidity Provider and the Policy Provider of such Order and establishing as a Special Distribution Date the date that is the earlier of the third Business Day that immediately precedes the expiration of the Policy and the Business Day that immediately follows the 25th day after the Subordination Agent's notice. With respect to that Special Distribution Date, the Subordination Agent will request a Policy Drawing for the relevant Preference Amount and deliver to the Policy Provider a copy of the documentation required by the Policy with respect to such Order. GENERAL All requests by the Subordination Agent for a Policy Drawing under the Policy are to be made by it no later than 1:00 p.m. (New York City time) on (or, in the case of any Preference Amount, at least three Business Days prior to) the applicable Distribution Date and in the form required by the Policy and delivered to the Policy Provider in accordance with the Policy. All proceeds of any Policy Drawing are to be deposited by the Subordination Agent in the policy account established by the Subordination Agent under the Intercreditor Agreement (the "Policy Account") and from there paid to the Class G Trustee for distribution to the holders of the Class G Certificates without regard to the subordination provisions of the Intercreditor Agreement. In the case of any Preference Amounts, however, all or part of the Policy Drawing will be paid directly to the receiver, conservator, debtor-in-possession or trustee in bankruptcy to the extent such amounts have not been paid by the Certificateholders. If any request for a Policy Drawing is rejected because it does not satisfy the requirements of the Policy, the Subordination Agent will resubmit the request so as to satisfy those requirements. The Policy provides that if such a request for a Policy Drawing is properly submitted or resubmitted it will pay to the Subordination Agent for deposit in the Policy Account the applicable payment under the Policy no later than 4:00 p.m. on the later of the relevant Distribution Date and the date the request is received by the Policy Provider (if received by 1:00 p.m. on such date) or on the next Business Day (if the request is received after that time). Subject to the reimbursement rights of the Primary Liquidity Provider, the Policy Provider is subrogated to all of the rights of the holders of the Class G Certificates to payment on the Class G Certificates to the extent of the payments made under the Policy. Once any payment made under the Policy is received by the Subordination Agent, the Policy Provider will have no further obligation in respect of those payments, regardless of whether or not the funds are properly distributed by the Subordination Agent or the Trustee for the Class G Trust. The Policy Provider is not required to make any payment except at the times and in the amounts expressly set forth in the Policy. The Policy does not cover (i) shortfalls, if any, attributable to the liability of the Class G Trust, the Class G Trustee, or the Subordination Agent for withholding taxes, if any (including interest and penalties in respect of that liability), (ii) any Break-Amount or Make-Whole Amount or interest thereon, (iii) any premium, prepayment penalty or other accelerated payment, which at any time becomes due on or with respect to any Class G Certificate, or (iv) any failure of the Subordination Agent or the Trustee of such Trust to make any payment due to the holders of the Class G Certificates from funds received. The Policy is noncancellable. The Policy expires and terminates without any action on the part of the Policy Provider or any other person on the date that is one year and one day following the date on which Final Distributions on the Class G Certificates are made, unless an Insolvency Proceeding has commenced and has not been concluded or dismissed on the date of termination of the Policy, in which case on the later of (i) the date of the conclusion or dismissal of such Insolvency Proceeding without continuing 70 jurisdiction by the court in such Insolvency Proceeding and (ii) the date on which the Policy Provider has made all payments required to be made under the terms of the Policy in respect of Preference Amounts. No portion of the premium under the Policy is refundable for any reason including payment or provision being made for payment. The Policy is construed under the laws of the State of New York. DEFINITIONS "Insolvency Proceeding" means the commencement of any bankruptcy, insolvency, readjustment of debt, reorganization, marshalling of assets and liabilities or similar proceedings by or against Delta or any Liquidity Provider and the commencement of any proceedings by Delta or any Liquidity Provider for the winding up or liquidation of its affairs or the consent to the appointment of a trustee, conservator, receiver, or liquidator in any bankruptcy, insolvency, readjustment of debt, reorganization, marshalling of assets and liabilities or similar proceedings of or relating to Delta or any Liquidity Provider. "Order" means a final, non-appealable order of a court of competent jurisdiction exercising jurisdiction in an insolvency proceeding providing for recovery of a Preference Amount. "Preference Amount" means any payment of principal of, or interest at the applicable Stated Interest Rate on, the Series G Equipment Notes made to the Class G Trustee or the Subordination Agent or (without duplication) any payment of the Pool Balance of, or interest at the applicable State Interest Rate on, the Class G Certificates (or any payment of the proceeds of any drawing under the Primary Liquidity Facility or the Above-Cap Account in respect of the Class G Certificates) made to a holder which has become recoverable or had been recovered from the Class G Trustee , the Subordination Agent or the holders (as the case may be) as a result of such payment being determined or deemed a preferential transfer pursuant to the United States Bankruptcy Code or otherwise rescinded or required to be returned in accordance with an Order, provided that Preference Amount shall not include any amounts that were or are required to be deducted in respect of taxes from the related preferential transfer. THE POLICY PROVIDER AGREEMENT Pursuant to the insurance and indemnity agreement (the "Policy Provider Agreement"), dated the Issuance Date, among the Subordination Agent, Delta, the Class G Trustee and the Policy Provider, the Subordination Agent agreed to reimburse the Policy Provider for amounts paid pursuant to Policy Drawings under the Policy. These rights to reimbursement from the Subordination Agent are subject, pursuant to the terms of the Policy Provider Agreement and the Intercreditor Agreement, to the priorities set forth in the Intercreditor Agreement. Under certain circumstances, Delta will directly reimburse the Policy Provider with respect to the Policy Drawings to the extent not reimbursed under the Intercreditor Agreement. Pursuant to a policy fee letter (the "Policy Fee Letter"), Delta and the Subordination Agent (but without duplication) agreed to pay the Policy Provider a premium for the Policy and any other amounts due under the Policy Fee Letter. DESCRIPTION OF THE INTERCREDITOR AGREEMENT The following summary describes certain provisions of the Intercreditor Agreement (the "Intercreditor Agreement") among the Trustees, the Liquidity Providers, the Policy Provider and U.S. Bank Trust National Association, as subordination agent (the "Subordination Agent"). The summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Intercreditor Agreement, which has been filed as an exhibit to the Registration Statement. Copies are available as set forth under "Where You Can Find More Information." 71 INTERCREDITOR RIGHTS GENERAL The Equipment Notes relating to each Trust were issued to and registered in the name of the Subordination Agent as agent and trustee for the Trustee of such Trust. CONTROLLING PARTY With respect to any Indenture at any given time, the Loan Trustee under such Indenture will be directed in taking, or refraining from taking, any action thereunder or with respect to the Equipment Notes issued under such Indenture by the Subordination Agent acting at the direction of the Controlling Party. For so long as the Subordination Agent is the registered holder of the Equipment Notes and the Policy Provider is not the Controlling Party, the Subordination Agent will act with respect to the preceding sentence in accordance with the directions of the Trustee acting as Controlling Party. Any such Trustee acting as Controlling Party will direct the Subordination Agent as directed by Certificateholders evidencing fractional undivided interests aggregating not less than an majority in interest in the relevant Trust. (Intercreditor Agreement, Sections 2.06 and 8.01(b)) Notwithstanding the foregoing, no amendment, modification, consent or waiver will, without the consent of each Liquidity Provider, the Policy Provider and the Trustee (other than the Trustee of any Trust all of the Certificates of which are held or beneficially owned by Delta and/or any of its affiliates) of each Trust whose Certificateholders would be affected thereby reduce the amount of principal or interest payable by Delta under any Equipment Note issued under any Indenture or delay the timing of such payment. (Intercreditor Agreement, Section 8.01(b)) See "Description of the Certificates -- Indenture Events of Default and Certain Rights Upon an Indenture Event of Default" for a description of the rights of the Certificateholders of each Trust to direct the respective Trustees. Subject to the following paragraph, if Final Distributions have not been fully paid to the holders of the Class G Certificates or if any obligations payable to the Policy Provider under the Intercreditor Agreement remain outstanding, so long as no Policy Provider Default has occurred and is continuing, the Policy Provider will be the "Controlling Party". At any other time, the "Controlling Party" will be: - if Final Distributions have been not been paid in full to the holders of Class G Certificates, the Class G Trustee; - if Final Distributions have been paid in full to the holders of the Class G Certificates, but not to the holders of the Class C Certificates, the Class C Trustee; and - if Final Distributions have been paid in full to the holders of the Class G Certificates and Class C Certificates, the Class D Trustee. At any time after 18 months from the earliest to occur of (x) the date on which the entire Required Amount under the Primary Liquidity Facility has been drawn (excluding a Downgrade Drawing or Non-Extension Drawing) and remains unreimbursed, (y) the date on which the portion of any Downgrade Drawing or Non-Extension Drawing equal to the Required Amount as of such date has been withdrawn from the Primary Cash Collateral Account to pay interest on the Class G Certificates and remain unreimbursed or, if earlier, the date on which the entire amount of any Downgrade Drawing or Non-Extension Drawing is converted to a Final Drawing and remains unreimbursed, and (z) the date on which all Equipment Notes under all Indentures have been accelerated (provided that in the event of a bankruptcy proceeding under the U.S. Bankruptcy Code in which Delta is a debtor, any amounts payable in respect of Equipment Notes which have become immediately due and payable by declaration or otherwise will not be considered accelerated for purposes of this clause (z) until the expiration of the 60-day period under Section 1110(a)(2)(A) of the Bankruptcy Code or such longer period as may apply under Section 1110(a)(2)(B) or Section 1110(b) of the Bankruptcy Code), the Primary Liquidity Provider (so long as such Primary Liquidity Provider has not defaulted in its obligation to make any advance under the Primary Liquidity Facility) will have the right to become the Controlling Party with 72 respect to any Indenture, provided that if the Policy Provider pays to the Primary Liquidity Provider all outstanding drawings and interest thereon owing to such Primary Liquidity Provider under the Primary Liquidity Facility, including all interest accrued thereon to such date, the Policy Provider shall be the Controlling Party so long as the Policy Provider pays to the Primary Liquidity Provider all drawings under the Primary Liquidity Facility outstanding from time to time thereafter and interest thereon and so long as no Policy Provider Default has occurred and is continuing. (Intercreditor Agreement, Section 2.06) For purposes of giving effect to the rights of the Controlling Party, the Trustees (other than the Controlling Party) irrevocably agree, and the Certificateholders (other than the Certificateholders represented by the Controlling Party) will be deemed to agree by virtue of their purchase of Certificates, that the Subordination Agent, as record holder of the Equipment Notes, will exercise its voting rights in respect of the Equipment Notes as directed by the Controlling Party, subject to the provisions of the Intercreditor Agreement. (Intercreditor Agreement, Sections 2.06 and 8.01(b)) For a description of certain limitations on the Controlling Party's rights to exercise remedies, see "Description of the Equipment Notes -- Remedies". "Policy Provider Default" means the occurrence of any of the following events: (a) the Policy Provider fails to make a payment required under any Policy in accordance with its terms and such failure remains unremedied for two Business Days following the delivery of written notice of such failure to the Policy Provider, (b) the Policy Provider (i) files any petition or commences any case or proceeding under any provisions of any federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii) makes a general assignment for the benefit of its creditors or (iii) has an order for relief entered against it under any federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization that is final and nonappealable, or (c) a court of competent jurisdiction, the Wisconsin Department of Insurance or another competent regulatory authority enters a final and nonappealable order, judgment or decree (i) appointing a custodian, trustee, agent or receiver for the Policy Provider or for all or any material portion of its property (ii) authorizing the taking of possession by a custodian, trustee, agent or receiver of the Policy Provider (or taking of possession of all or any material portion of the Policy Provider's property). "Final Distributions" means, with respect to the Certificates of any Trust on any Distribution Date, the sum of (x) the aggregate amount of all accrued and unpaid interest in respect of such Certificates and (y) the Pool Balance of such Certificates as of the immediately preceding Distribution Date. For purposes of calculating Final Distributions with respect to the Certificates of any Trust, any Make-Whole Amount or Break Amount paid on the Equipment Notes held in such Trust that has not been distributed to the Certificateholders of such Trust (other than such Make-Whole Amount or Break Amount or a portion thereof applied to the distributions of interest on the Certificates of such Trust or the reduction of the Pool Balance of such Trust) shall be added to the amount of such Final Distributions. (Intercreditor Agreement, Section 1.01) SALE OF EQUIPMENT NOTES OR AIRCRAFT Following the occurrence and during the continuation of any Indenture Event of Default under any Indenture, the Controlling Party may direct the Subordination Agent to accelerate the Equipment Notes issued under such Indenture and, subject to the provisions of the immediately following sentence, sell all (but not less than all) of such Equipment Notes or the related Aircraft to any person. So long as any Certificates are outstanding, during the nine months after the earlier of (x) the acceleration of the Equipment Notes issued under any Indenture and (y) the bankruptcy or insolvency of Delta, no Aircraft subject to the lien of such Indenture or such Equipment Notes may be sold without the consent of each Trustee (other than the Trustee of any Trust all of the Certificates of which are held or beneficially owned by Delta and/or an affiliate of Delta), if the net proceeds from such sale would be less than the Minimum Sale Price for such Aircraft or such Equipment Notes. "Minimum Sale Price" means, with respect to any Aircraft or the Equipment Notes issued in respect of such Aircraft, at any time, the lesser of (i) 75% of the Appraised Current Market Value of such 73 Aircraft and (ii) the aggregate outstanding principal amount of such Equipment Notes, plus accrued and unpaid interest thereon. PRIORITY OF DISTRIBUTIONS The subordination terms applicable to the Certificates vary depending upon whether a Triggering Event has occurred. "Triggering Event" means (i) the occurrence of an Indenture Event of Default under all Indentures resulting in a PTC Event of Default with respect to the most senior Class of Certificates then outstanding, (ii) the acceleration of all of the outstanding Equipment Notes or (iii) certain bankruptcy or insolvency events involving Delta. BEFORE A TRIGGERING EVENT So long as no Triggering Event has occurred (whether or not continuing), all payments made in respect of the Equipment Notes and certain other payments received on any Distribution Date will be distributed promptly by the Subordination Agent on such Distribution Date in the following order of priority: - to the Primary Liquidity Provider to the extent required to pay Liquidity Expenses and to the Policy Provider to the extent required to pay Policy Expenses, pro rata; - to the Primary Liquidity Provider to the extent required to pay accrued and unpaid interest on the Liquidity Obligations (as determined after giving effect to payments made by the Policy Provider to the Primary Liquidity Provider in respect of interest on drawings under the Primary Liquidity Facility and in accordance with the Intercreditor Agreement) and to the Policy Provider to the extent required to pay interest accrued on certain Policy Provider Obligations (as provided in the definition thereof) and, if the Policy Provider has elected to pay to the Primary Liquidity Provider all outstanding drawings and interest thereon owing to the Primary Liquidity Provider under the Primary Liquidity Facility, to the extent required to reimburse the Policy Provider for the amount of such payment made to the Primary Liquidity Provider attributable to interest accrued on such drawings, pro rata; - if applicable, to replenish the Primary Cash Collateral Account up to the Required Amount, and then to the Primary Liquidity Provider to the extent required to pay or reimburse the Primary Liquidity Provider for certain Liquidity Obligations (other than amounts payable pursuant to the two preceding clauses and as determined after giving effect to payments made by the Policy Provider to the Primary Liquidity Provider in respect of principal of drawings under the Primary Liquidity Facility) and, if the Policy Provider has elected to pay to the Primary Liquidity Provider all outstanding drawings and interest thereon owing to the Primary Liquidity Provider under the Primary Liquidity Facility, to the Policy Provider to the extent required to reimburse the Policy Provider for any payment made to the Primary Liquidity Provider in respect of principal of drawings under the Primary Liquidity Facility; - to the Primary Liquidity Provider (if any amounts are distributed to replenish the Primary Cash Collateral Account as described in the previous bullet point), an amount equal to the excess of (x) the aggregate outstanding amount of unreimbursed drawings under the Primary Liquidity Facility (whether or not then due and after giving effect to any other payments made in reimbursement of such drawings on such Distribution Date) over (y) the Required Amount; - if the Above-Cap Reserve Account has been previously funded, to replenish the Above-Cap Reserve Account in an amount equal to the Above-Cap Reserve Amount, as recalculated as of such date (less any amount then on deposit in the Above-Cap Account); - to the Class G Trustee to the extent required to pay Expected Distributions on the Class G Certificates; 74 - to the Policy Provider to the extent required to pay Policy Provider Obligations (other than amounts payable pursuant to the clauses above and Policy Provider Interest Amounts); - to the Policy Provider to the extent required to pay Excess Reimbursement Obligations, Policy Provider Interest Amounts and any amounts due under the Policy Fee Letter; - to the Class C Trustee to the extent required to pay Expected Distributions on the Class C Certificates; provided that if such Class C Certificates have been transferred by the initial holder thereof to any entity other than Delta or any of its affiliates, the Expected Distributions on the Class C Certificates shall be distributed to the Class C Trustee prior to the payment of Excess Reimbursement Obligations, Policy Provider Interest Amounts and any amounts due under the Policy Fee Letter to the Policy Provider; - to the Class D Trustee to the extent required to pay Expected Distributions on the Class D Certificates; - to the Subordination Agent and each Trustee for the payment of certain fees and expenses; and - if the Above-Cap Reserve Account has been previously funded, to the Above-Cap Reserve Account in an amount equal to the Above-Cap Reserve Amount (as recalculated as of such date). "Liquidity Expenses" means the Liquidity Obligations other than (i) the principal amount of any drawing under the Primary Liquidity Facility and (ii) any interest accrued on any Liquidity Obligations. "Policy Expenses" means all amounts (including amounts in respect of expenses) owing to the Policy Provider under the Policy Provider Agreement or certain other agreements other than any amounts due under the Policy Fee Letter, the amount of any Excess Reimbursement Obligations, any Policy Drawing and any interest accrued thereon, reimbursement of and interest on the Liquidity Obligations in respect of the Primary Liquidity Facility paid by the Policy Provider to the Primary Liquidity Provider, any indemnity payments owed to the Policy Provider and any amounts that the Policy Provider is entitled to receive by virtue of the subrogation rights of the Policy Provider under the Intercreditor Agreement, including, without limitation, fees and expenses incurred in connection with the enforcement of such rights. "Liquidity Obligations" means the obligations to reimburse or to pay the Primary Liquidity Provider all principal, interest, fees and other amounts owing to it under the Primary Liquidity Facility or certain other agreements. "Policy Provider Interest Amount" means (i) interest on unreimbursed Policy Drawings to the extent not included in Policy Provider Obligations and (ii) interest on all amounts due and unpaid to the Policy Provider under the Policy Provider Agreement (including, without limitation, interest on all due and unpaid premiums, fees, expenses and indemnities), in each case, accruing at a rate of LIBOR plus 2.00% per annum. For the avoidance of doubt, interest on unreimbursed Policy Drawings shall be deemed to accrue from the date which such Policy Drawing was made. "Policy Provider Obligations" means all Policy Drawings and all reimbursement and other amounts, including fees and indemnities, due to the Policy Provider under the Policy Provider Agreement to the extent not included in Policy Expenses but shall not include (i) any amounts due under the Policy Fee Letter, (ii) Excess Reimbursement Obligations and (iii) any interest on Policy Drawings except, if the Primary Liquidity Provider has failed to honor its obligation to make a payment on any Interest Drawing with respect to the Class G Certificates, interest on the portion of any Policy Drawing made to cover the shortfall attributable to such failure by the Primary Liquidity Provider in an amount equal to the amount of interest that would have accrued on such Interest Drawing if such Interest Drawing had been made at the interest rate applicable to such Interest Drawing under the Primary Liquidity Facility until such Policy Drawing has been repaid in full, up to a maximum of six such Policy Drawings. For the avoidance of doubt and subject to the effect of the payment priorities with respect to Excess Reimbursement Obligations, Policy Provider Obligations include reimbursement of and interest on the Liquidity Obligations in respect of the Primary Liquidity Facility paid by the Policy Provider to the Primary Liquidity Provider. 75 "Policy Drawing" means, with respect to any Policy, any payment of a claim under such Policy. "Excess Reimbursement Obligations" means (a) in the event of any Policy Provider Election, the portion of the Policy Provider Obligations that represents interest on the Equipment Note in respect of which the Policy Provider Election has been made in excess of 21 months of interest at the interest rate applicable to such Equipment Note and (b) any interest on the Liquidity Obligations in respect of the Primary Liquidity Facility paid by the Policy Provider to the Primary Liquidity Provider from and after the end of the 21-month period referred to under the caption "Description of the Policy and the Policy Provider Agreement -- The Policy -- No Proceeds Drawing." "Expected Distributions" means, with respect to the Certificates of any Trust on any Distribution Date (the "Current Distribution Date"), the sum of (1) accrued and unpaid interest in respect of such Certificates and (2) the difference between: (a) the Pool Balance of such Certificates as of the immediately preceding Distribution Date (or, if the Current Distribution Date is the first Distribution Date, the original aggregate face amount of the Certificates of such Trust); and (b) the Pool Balance of such Certificates as of the Current Distribution Date calculated on the basis that (i) the principal of the Equipment Notes held in such Trust has been paid when due (whether at stated maturity, upon redemption, prepayment, purchase, acceleration or otherwise) and such payments have been distributed to the holders of such Certificates and (ii) the principal of any Equipment Notes formerly held in such Trust that have been sold pursuant to the Intercreditor Agreement has been paid in full and such payments have been distributed to the holders of such Certificates. (Intercreditor Agreement, Section 1.01) For purposes of calculating Expected Distributions with respect to the Certificates of any Trust, any Make-Whole Amount or Break Amount paid on the Equipment Notes held in such Trust that has not been distributed to the Certificateholders of such Trust (other than such Make-Whole Amount or Break Amount or a portion thereof applied to distributions of interest on the Certificates of such Trust or the reduction of the Pool Balance of such Trust) will be added to the amount of Expected Distributions. For purposes of determining the priority of distributions on account of the redemption of Equipment Notes issued pursuant to an Indenture, clause (1) of the definition of Expected Distributions set forth above shall be deemed to read as follows: "(1) accrued, due and unpaid interest on such Certificates together with (without duplication) accrued and unpaid interest on a portion of such Certificates equal to the outstanding principal amount of the Equipment Notes being redeemed or prepaid (immediately prior to such redemption or prepayment)." AFTER A TRIGGERING EVENT Subject to the terms of the Intercreditor Agreement, upon the occurrence of a Triggering Event and at all times thereafter, all funds received by the Subordination Agent in respect of the Equipment Notes and certain other payments received by the Subordination Agent will be distributed promptly by the Subordination Agent in the following order of priority: - to the Subordination Agent and any Trustee, to the extent required to pay certain reasonable out-of-pocket costs and expenses actually incurred by the Subordination Agent or such Trustee in protection of, or realization of the value of, the Equipment Notes or any Collateral under (and as defined in) any Indenture, or to any Certificateholder, the Policy Provider or the Primary Liquidity Provider for payments made to the Subordination Agent or any Trustee in respect of such amounts; - to the Primary Liquidity Provider to the extent required to pay Liquidity Expenses and to the Policy Provider to the extent required to pay the Policy Expenses, pro rata; - to the Primary Liquidity Provider to the extent required to pay accrued and unpaid interest on the Liquidity Obligations (as determined after giving effect to payments made by the Policy Provider to the Primary Liquidity Provider in respect of interest on drawings under the Primary Liquidity 76 Facility in accordance with the Intercreditor Agreement) and to the Policy Provider to the extent required to pay interest accrued on certain Policy Provider Obligations (as provided in the definition thereof) and, if the Policy Provider has elected to pay to the Primary Liquidity Provider all outstanding drawings and interest thereon owing to the Primary Liquidity Provider under the Primary Liquidity Facility, to reimburse the Policy Provider for the amount of such payment made to the Primary Liquidity Provider, attributable to interest accrued on such drawings, pro rata; - (i) if applicable, to replenish the Primary Cash Collateral Account up to the Required Amount unless, in the case of this clause (i), (x) less than 65% of the aggregate outstanding principal amount of all Equipment Notes are Performing Equipment Notes and a Liquidity Event of Default has occurred and is continuing under the Primary Liquidity Facility or (y) a Final Drawing has occurred under the Primary Liquidity Facility), and then (ii) to the Primary Liquidity Provider to the extent required to pay the outstanding amount of all Liquidity Obligations (as determined after giving effect to payments made by the Policy Provider to the Primary Liquidity Provider in respect of principal of drawings under the Primary Liquidity Facility) and, if the Policy Provider has elected to pay to the Primary Liquidity Provider all outstanding drawings and interest thereon owing to the Primary Liquidity Provider under the Primary Liquidity Facility, to the Policy Provider to the extent required to reimburse the Policy Provider for any payment made to the Primary Liquidity Provider in respect of principal of drawings under the Primary Liquidity Facility; - to the Primary Liquidity Provider (if any amounts are distributed to replenish the Primary Cash Collateral Account as described in the previous bullet point), an amount equal to the excess of (x) the aggregate outstanding amount of unreimbursed drawings under the Primary Liquidity Facility (whether or not then due and after giving effect to any other payments made in reimbursement of such drawings on such Distribution Date) over (y) the Required Amount; - unless (x) less than 65% of the aggregate outstanding principal amount of all Equipment Notes are Performing Equipment Notes and a Liquidity Event of Default has occurred and is continuing under the Primary Liquidity Facility or (y) a Final Drawing has occurred under the Primary Liquidity Facility, to the Above-Cap Reserve Account up to an amount equal to the Above-Cap Reserve Amount as recalculated as of such date (less any amount then on deposit in the Above-Cap Account); - to the Subordination Agent and any Trustee to the extent required to pay certain fees, taxes, charges and other amounts payable or to any Certificateholder for payments made to the Subordination Agent or any Trustee in respect of such amounts; - to the Class G Trustee to the extent required to pay Adjusted Expected Distributions on the Class G Certificates; - to the Policy Provider in payment of the Policy Provider Obligations (other than amounts payable pursuant to the first four clauses above and any Policy Provider Interest Amounts) and any amounts due under the Policy Fee Letter; - to pay any Excess Reimbursement Obligations and Policy Provider Interest Amounts to the Policy Provider; - to the Class C Trustee to the extent required to pay Adjusted Expected Distributions on the Class C Certificates; provided that if such Class C Certificates have been transferred by the initial holder thereof to an entity other than Delta or any of its affiliates, the Adjusted Expected Distributions on the Class C Certificates shall be distributed to the Class C Trustee prior to the payment of Excess Reimbursement Obligations and Policy Provider Interest Amounts to the Policy Provider; - to the Class D Trustee to the extent required to pay Adjusted Expected Distributions on the Class D Certificates; 77 - unless (x) less than 65% of the aggregate outstanding principal amount of all Equipment Notes are Performing Equipment Notes and a Liquidity Event of Default has occurred and is continuing under the Primary Liquidity Facility or (y) a Final Drawing has occurred under the Primary Liquidity Facility, to the Above-Cap Reserve Account up to an amount equal to the Above-Cap Reserve Amount (as recalculated as of such date); - to the Class G Trustee to the extent required to pay Final Distributions on the Class G Certificates in full; - to the Class C Trustee to the extent required to pay Final Distributions on the Class C Certificates in full; and - to the Class D Trustee to the extent required to pay Final Distributions on the Class D Certificates in full. "Adjusted Expected Distributions" means, with respect to the Certificates of any Trust on any Current Distribution Date, the sum of (1) accrued and unpaid interest in respect of such Certificates and (2) the greater of: (a) the difference between (x) the Pool Balance of such Certificates as of the immediately preceding Distribution Date (or, if the Current Distribution Date is the first Distribution Date, the original aggregate face amount of the Certificates of such Trust) and (y) the Pool Balance of such Certificates as of the Current Distribution Date calculated on the basis that (i) the principal of the Equipment Notes other than Performing Equipment Notes (the "Non-Performing Equipment Notes") held in such Trust has been paid in full and such payments have been distributed to the holders of such Certificates, (ii) the principal of the Performing Equipment Notes held in such Trust has been paid when due (but without giving effect to any acceleration of Performing Equipment Notes) and such payments have been distributed to the holders of such Certificates and (iii) the principal of any Equipment Notes formerly held in such Trust that have been sold pursuant to the Intercreditor Agreement has been paid in full and such payments have been distributed to the holders of such Certificates; and (b) the amount of the excess, if any, of (i) the Pool Balance of such Class of Certificates as of the immediately preceding Distribution Date (or, if the Current Distribution Date is the first Distribution Date, the original aggregate face amount of the Certificates of such Trust), over (ii) the Aggregate LTV Collateral Amount for such Class of Certificates for the Current Distribution Date; provided that, until the date of the initial LTV Appraisals for all of the Aircraft, clause (b) shall not apply. For purposes of calculating Adjusted Expected Distributions with respect to the Certificates of any Trust, any Break Amount or Make-Whole Amount paid on the Equipment Notes held in such Trust that has not been distributed to the Certificateholders of such Trust (other than such Break Amount or Make-Whole Amount or a portion thereof applied to distributions of interest on the Certificates of such Trust or the reduction of the Pool Balance of such Trust) will be added to the amount of Adjusted Expected Distributions. "Aggregate LTV Collateral Amount" for any Class of Certificates for any Distribution Date means an amount, not less than zero, equal to the sum of the applicable LTV Collateral Amounts for such Class of Certificates for all Aircraft, minus the Pool Balance for each Class of Certificates, if any, senior to such Class, after giving effect to any distribution of principal on such Distribution Date with respect to such senior Class or Classes. "LTV Collateral Amount" of any Aircraft for any Class of Certificates means, as of any Distribution Date, the lesser of (i) the LTV Ratio for such Class of Certificates multiplied by the Appraised Current Market Value of such Aircraft (or with respect to any such Aircraft that has suffered an Event of Loss under and as defined in the relevant Indenture, the amount of the insurance proceeds paid to the related Loan Trustee in respect thereof to the extent then held by such Loan Trustee (and/or on deposit in the 78 Special Payments Account) or payable to such Loan Trustee in respect thereof or with respect to any such Aircraft that has been released from the related Indenture pursuant to the defeasance provisions thereof, the amount of money and U.S. Government Obligations deposited with the Loan Trustee pursuant thereto as of such Distribution Date) and (ii) the outstanding principal amount of the Equipment Notes secured by such Aircraft after giving effect to any principal payments of such Equipment Notes on or before such Distribution Date. "LTV Ratio" means for the Class G Certificates 49.0%, for the Class C Certificates 65.9% and for the Class D Certificates 74.1%. "Appraised Current Market Value" of any Aircraft means the lower of the average and the median of the three most recent LTV Appraisals of such Aircraft. "LTV Appraisal" means a current fair market value appraisal (which may be a "desk-top" appraisal) performed by any Appraiser or any other nationally recognized appraiser on the basis of an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller under no compulsion to sell and both having knowledge of all relevant facts. After a Triggering Event occurs and any Equipment Note becomes a Non-Performing Equipment Note, the Subordination Agent will obtain LTV Appraisals of all of the Aircraft as soon as practicable and additional LTV Appraisals on or prior to each anniversary of the date of such initial LTV Appraisals; provided that if the Controlling Party reasonably objects to the appraised value of the Aircraft shown in such LTV Appraisals, the Controlling Party shall have the right to obtain or cause to be obtained substitute LTV Appraisals (including LTV Appraisals based upon physical inspection of such Aircraft). Interest Drawings under the Primary Liquidity Facility, withdrawals from the Primary Cash Collateral Account and withdrawals from the Above-Cap Account, in each case in respect of interest distributable on the Glass G Certificates, will be distributed to the Class G Trustee and drawings under the Policy will be distributed to the Class G Trustee, notwithstanding the priority of distributions set forth in the Intercreditor Agreement and otherwise described herein. VOTING OF EQUIPMENT NOTES In the event that the Subordination Agent, as the registered holder of any Equipment Note, receives a request for its consent to any amendment, modification or waiver under such Equipment Note or other related document, the Subordination Agent will exercise its voting rights as directed by the Controlling Party; provided that no amendment, waiver, modification or consent shall, without the consent of the Policy Provider, each Liquidity Provider and the Trustee (other than the Trustee of any Trust all of the Certificates of which are held or beneficially owned by Delta and/or any of its affiliates) of each Trust whose Certificateholders would be affected, (i) reduce the amount of principal or interest payable by Delta under any Equipment Note or delay the timing of such payment, (ii) create any lien with respect to the Collateral prior to, pari passu with or subordinate to the lien of such Indenture or deprive any holder of an Equipment Note issued under such Indenture of the benefit of the lien of such Indenture upon the Collateral or (iii) reduce the percentage in principal amount of the outstanding Equipment Notes issued under such Indenture required to take or approve any action under such Indenture. (Intercreditor Agreement, Section 8.01(b)) THE SUBORDINATION AGENT U.S. Bank Trust National Association, is the Subordination Agent under the Intercreditor Agreement. Delta and its affiliates may from time to time enter into banking and trustee relationships with the Subordination Agent and its affiliates. The Subordination Agent's address is U.S. Bank Trust National Association, 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention: Corporate Trust Division. The Subordination Agent may resign at any time, in which event a successor Subordination Agent will be appointed as provided in the Intercreditor Agreement. Delta or the Controlling Party may at any 79 time remove the Subordination Agent as provided in the Intercreditor Agreement. In such circumstances, a successor Subordination Agent will be appointed as provided in the Intercreditor Agreement. Any resignation or removal of the Subordination Agent and appointment of a successor Subordination Agent does not become effective until acceptance of the appointment by the successor Subordination Agent. (Intercreditor Agreement, Section 7.01) DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS THE AIRCRAFT The Aircraft consist of two Boeing 737-832 aircraft and ten Boeing 767-332ER aircraft (collectively, the "Aircraft"), all of which have been delivered new to Delta by the manufacturer. The Aircraft have been designed to be in compliance with Stage 3 noise level standards, which are the most restrictive regulatory standards currently in effect in the United States for aircraft noise abatement. The Boeing 737-832 is a single aisle commercial jet aircraft. Seating capacity is 154 seats in Delta's standard configuration. The 737-832 is deployed on Delta's North American routes, as well as to points in the Caribbean, Central America and the northern rim of South America. The 737-832 is powered by two CFM56-7B26 jet engines manufactured by CFM International, Inc. The Boeing 767-332ER is a twin aisle commercial jet aircraft. Seating capacities are 190 and 195 seats for Delta's transatlantic configuration. The 767-332ER is deployed primarily on Delta's transatlantic and South American routes. Six of the 767-332ER Aircraft are powered by two PW4060 jet engines manufactured by United Technologies Corporation and four of the 767-332ER Aircraft are powered by two CF6-80C2B6F jet engines manufactured by General Electric Company. THE APPRAISALS The table below sets forth the appraised base values of the Aircraft as of the Issuance Date as determined by Aircraft Information Systems, Inc. ("AISI"), AvSolutions, Inc. ("AvSolutions") and BK Associates, Inc. ("BK," and together with AISI and AvSolutions, the "Appraisers"), independent aircraft appraisal and consulting firms, and certain additional information regarding the Aircraft.
APPRAISERS' VALUATIONS APPRAISED DATE --------------------------------------- BASE AIRCRAFT TYPE REGISTRATION NUMBER DELIVERED AISI AVSOLUTIONS BK VALUE(1) - ------------- ------------------- --------- ----------- ----------- ----------- ----------- Boeing 737-832....... N3760C 12/21/01 $40,950,000 $44,480,000 $40,650,000 $40,950,000 Boeing 737-832....... N3761R 12/20/01 40,950,000 44,480,000 40,650,000 40,950,000 Boeing 767-332ER..... N193DN 8/21/97 65,310,000 66,930,000 68,650,000 66,930,000 Boeing 767-332ER..... N194DN 9/26/97 65,310,000 67,210,000 68,900,000 67,140,000 Boeing 767-332ER..... N195DN 9/30/97 65,310,000 67,210,000 68,900,000 67,140,000 Boeing 767-332ER..... N196DN 10/30/97 65,310,000 67,490,000 69,200,000 67,333,333 Boeing 767-332ER..... N197DN 12/23/97 65,310,000 68,060,000 69,700,000 67,690,000 Boeing 767-332ER..... N198DN 2/2/98 68,310,000 68,630,000 70,400,000 68,630,000 Boeing 767-332ER..... N1611B 5/15/00 74,280,000 76,780,000 77,550,000 76,203,333 Boeing 767-332ER..... N178DZ 5/23/00 74,280,000 76,780,000 77,550,000 76,203,333 Boeing 767-332ER..... N1612T 5/26/01 78,190,000 80,710,000 80,800,000 79,900,000 Boeing 767-332ER..... N1613B 8/10/01 78,190,000 81,730,000 81,550,000 80,490,000
- --------------- (1) The appraised base value of each Aircraft is the lesser of the average and median base values of such Aircraft as determined by the Appraisers. According to the International Society of Transport Aircraft Trading, "appraised base value" is defined as each Appraiser's opinion of the underlying economic value of an Aircraft in an open, unrestricted, stable market environment with a reasonable balance of supply and demand, and assumes full 80 consideration of its "highest and best use." An Aircraft's appraised base value is founded in the historical trend of values and in the projection of value trends and presumes an arm's length, cash transaction between willing, able and knowledgeable parties, acting prudently, with an absence of duress and with a reasonable period of time available for marketing. Each Appraiser was asked to provide its opinion as to the appraised base value of each Aircraft. All three Appraisers performed "desk-top" appraisals without any physical inspection of the Aircraft. The Appraisals are based on various assumptions and methodologies which vary among the appraisals and may not reflect current market conditions. Appraisals that are based on different assumptions and methodologies may result in valuations that are materially different from those contained in the appraisals. The Appraisers have delivered letters setting forth their respective appraisals, copies of which are annexed to this Prospectus as Appendix II. For a discussion of the assumptions and methodologies used in each of the appraisals, you should read such letters. An appraisal is only an estimate of value. It does not necessarily indicate the price at which an aircraft may be purchased from the manufacturer or any other seller, nor should it be relied upon as a measure of realizable value. The proceeds realized upon a sale of any Aircraft may be less than its appraised value. In addition, the value of the Aircraft in the event of the exercise of remedies under the applicable Indenture will depend on market and economic conditions at the time, the availability of buyers, the condition of the Aircraft, whether the Aircraft are sold separately or in one or more groups and other factors. In its appraisal letter, one of the appraisers points out that, as a result of the events of September 11, 2001, there has been a significant negative effect on current market values of all commercial aircraft and that the present used aircraft market is considered to be a distressed market. Accordingly, there can be no assurance that the proceeds realized upon any such exercise of remedies with respect to the Aircraft pursuant to the applicable Indenture would equal the appraised value of such Aircraft or be sufficient to satisfy in full payments due on the Equipment Notes relating to such Aircraft or on the Certificates. See "Risk Factors -- Risks Factors Relating to the Certificates and the Exchange Offer -- Appraisals and Realizable Value of Aircraft." DESCRIPTION OF THE EQUIPMENT NOTES The following summary describes certain terms of the Equipment Notes. The summary does not purport to be complete and makes use of terms defined in and are qualified in its entirety by reference to all of the provisions of the Equipment Notes, the Indentures and the Participation Agreements, which have been filed as exhibits to the Registration Statement. Copies are available as set forth under "Where You Can Find More Information." Except as otherwise indicated, the following summaries relate to the Equipment Notes, the Indenture, and the Participation Agreement applicable to each Aircraft. GENERAL Pursuant to the terms of a Participation Agreement among Delta, the Trustees, the Subordination Agent and the Loan Trustee with respect to each Aircraft (each, a "Participation Agreement"), the Trusts purchased from Delta the Equipment Notes issued under the related Indenture. Equipment Notes were issued in three series with respect to each Aircraft: the "Series G Equipment Notes," the "Series C Equipment Notes" and the "Series D Equipment Notes" (collectively, the "Equipment Notes"). The Equipment Notes with respect to each Aircraft were issued under a separate indenture (each, an "Indenture") between Delta and U.S. Bank Trust National Association, as loan trustee thereunder (each, a "Loan Trustee"). The Equipment Notes are direct, full recourse obligations of Delta. SUBORDINATION The Indentures provide for the following subordination provisions applicable to the Equipment Notes: - Series G Equipment Notes issued in respect of an Aircraft rank senior in right of payment to the Series C and Series D Equipment Notes issued in respect of such Aircraft; 81 - Series C Equipment Notes issued in respect of an Aircraft rank junior in right of payment to the Series G Equipment Notes issued in respect of such Aircraft and rank senior in right of payment to the Series D Equipment Notes issued in respect of such Aircraft; and - Series D Equipment Notes issued in respect of an Aircraft rank junior in right of payment to the Series G and Series C Equipment Notes issued in respect of such Aircraft. By virtue of the Intercreditor Agreement, all of the Equipment Notes are effectively cross-subordinated. This means that payments received on a junior series of Equipment Notes issued in respect of one Aircraft may be applied in accordance with the priority of payment provisions set forth in the Intercreditor Agreement to make distributions on a more senior Class of Certificates. PRINCIPAL AND INTEREST PAYMENTS Subject to the provisions of the Intercreditor Agreement, scheduled installments of interest paid on the Equipment Notes held in each Trust will be passed through to the Certificateholders of such Trust on the dates of such payment and at the rate per annum applicable to the Certificates issued by such Trust until the final expected Regular Distribution Date for such Trust. Subject to the provisions of the Intercreditor Agreement, principal paid on the Equipment Notes held in each Trust will be passed through to the Certificateholders of such Trust in scheduled amounts on the dates set forth herein until the final expected Regular Distribution Date for such Trust. Interest will be payable on the unpaid principal amount of each Equipment Note at the rate applicable to such Equipment Note on January 25, April 25, July 25 and October 25 of each year, commencing on April 25, 2003. Interest will be computed on the actual number of days elapsed over a 360-day year. Overdue amounts of principal, Break Amount (if any), Make-Whole Amount (if any) and interest on each series of Equipment Notes will, to the extent permitted by applicable law, bear interest at the interest rate applicable to such series of Equipment Notes, which interest rate equals the rate per annum applicable to the Certificates issued by the Trust that hold such series of Equipment Notes plus 1.00%. The principal payments of the Series G Equipment Notes are scheduled to be made on January 25, April 25, July 25 and October 25 in certain years, commencing on April 25, 2003 and ending on January 25, 2008. The entire principal of the Series C Equipment Notes will be payable on January 25, 2008. The principal payments of the Series D Equipment Notes are scheduled to be made on January 25, April 25, July 25 and October 25 in certain years, commencing on April 25, 2003 and ending on January 25, 2008. See "Description of the Certificates -Pool Factors" for a discussion of the scheduled payments of principal of the Equipment Notes and Appendix III for the schedule of payments of principal of each Equipment Note issued with respect to each Aircraft. If any due date for a payment of principal, Break Amount (if any), Make-Whole Amount (if any) or interest with respect to the Equipment Notes is not a Business Day, such payment will be due on the next succeeding Business Day and interest will be added for the additional period. DETERMINATION OF LIBOR For the purpose of calculating LIBOR for the periods from and including an Equipment Note payment date to and including the date preceding the next succeeding Equipment Note payment date (each, an "Interest Period"), Delta entered into a Reference Agency Agreement (the "Reference Agency Agreement") with U.S. Bank Trust National Association, as reference agent (the "Reference Agent"), the Subordination Agent and the Loan Trustee. The Reference Agent will determine LIBOR for each Interest Period, on a date (the "Reference Date") that is two London Banking Days before the date on which such Interest Period commences. On each Reference Date, the Reference Agent will determine LIBOR ("LIBOR") as the rate for deposits in U.S. dollars for a period of three months that appears on the display designated as page "3750" 82 on the Telerate Monitor (or such other page or service as may replace it) as of 11:00 a.m. (London time) on such date. If the rate determined as described in the foregoing paragraph does not appear on the Telerate Page 3750, the Reference Agent will determine LIBOR on the basis of the rates at which deposits in U.S. Dollars are offered by certain reference banks as described in the Reference Agency Agreement at approximately 11:00 a.m., London time, on the Reference Date for such Interest Period to prime banks in the London interbank market for a period of three months commencing on the first day of such Interest Period and in an amount that is representative for a single transaction in the London interbank market at the relevant time. The Reference Agent will request the principal London office of each of the reference banks to provide a quotation of its rate. If at least two such quotations are provided, the rate for that Interest Period will be the arithmetic mean of the quotations. If fewer than two quotations are provided, the interest rate for the next Interest Period shall be the arithmetic mean of the rates quoted by major banks in New York City, selected by the Reference Agent in good faith and in a commercially reasonable manner, at approximately 11:00 a.m., New York City time, on the first day of such Interest Period for loans in U.S. Dollars to leading European banks for a period of three months commencing on the first day of such Interest Period and in an amount that is representative for a single transaction in the New York market at the relevant time, except that, if the banks so selected by the Reference Agent are not quoting as mentioned above, LIBOR for such Interest Period shall be LIBOR as in effect for the last preceding Interest Period. The Reference Agent's determination of LIBOR (in the absence of negligence, willful default, bad faith or manifest error) will be conclusive and binding upon all parties. As promptly as is practicable after the determination thereof, the Reference Agent will give notice of its determination of LIBOR for the relevant Interest Period to Delta, the Trustees, the Loan Trustees, the Subordination Agent, the Initial Purchasers, the Policy Provider and the Liquidity Providers. Delta reserves the right to terminate the appointment of the Reference Agent at any time on 30 days' notice and to appoint a replacement reference agent in its place. Notice of any such termination will be given to the Trustees, the Loan Trustees and the Subordination Agent. The Reference Agent may not be removed or resign its duties without a successor having been appointed. REDEMPTION If an Event of Loss occurs with respect to an Aircraft and such Aircraft is not replaced by Delta under the related Indenture, the Equipment Notes issued with respect to such Aircraft will be redeemed, in whole, at a price equal to the aggregate unpaid principal amount thereof, together with accrued and unpaid interest thereon to (but excluding) the date of redemption, Break Amount (if any) but without any Make-Whole Amount, on a Special Distribution Date. If the Equipment Notes redeemed pursuant to the preceding sentence relate to a Core Aircraft, a portion of the Series G Equipment Notes issued under each Indenture relating to the remaining Core Aircraft will also be redeemed at a price equal to the principal amount of such portion, together with accrued and unpaid interest thereon to (but excluding) the date of redemption, Break Amount (if any) but without any Make-Whole Amount, on a Special Distribution Date. The portion of the Series G Equipment Notes issued under each Indenture relating to the remaining Core Aircraft to be redeemed will be the lesser of (x) a pro rata share, based on the amount of Series G Equipment Notes outstanding under each Indenture relating to a Core Aircraft (other than the Core Aircraft which suffered the Event of Loss), of the "Excess Amount" set forth in the table below for the Core Aircraft which suffered the Event of Loss, opposite the date in such table immediately preceding or concurrent with the date of such redemption and (y) the outstanding principal amount of Series G Equipment Notes under such Indenture. 83
EXCESS AMOUNT BY CORE AIRCRAFT --------------------------------------------------------------------------- DATE N3760C N3761R N193DN N194DN N1611B N178DZ - ---- ---------- ---------- ---------- ---------- ---------- ---------- January 30, 2003..... $4,968,931 $4,968,931 $6,816,224 $6,903,701 $8,851,148 $8,851,148 April 25, 2003....... 4,968,931 4,968,931 6,816,224 6,903,701 8,602,983 8,602,983 July 25, 2003........ 4,968,931 4,968,931 6,628,417 6,903,701 8,210,513 8,210,513 October 25, 2003..... 4,968,931 4,968,931 6,327,141 6,354,816 8,210,513 8,210,513 January 25, 2004..... 4,719,830 4,719,830 6,327,141 6,354,816 8,210,513 8,210,513 April 25, 2004....... 4,719,830 4,719,830 6,327,141 6,354,816 7,937,365 7,937,365 July 25, 2004........ 4,719,830 4,719,830 6,092,916 6,354,816 7,772,162 7,772,162 October 25, 2004..... 4,719,830 4,719,830 5,802,662 5,828,070 7,772,162 7,772,162 January 25, 2005..... 4,296,408 4,296,408 5,802,662 5,828,070 7,772,162 7,772,162 April 25, 2005....... 4,296,408 4,296,408 5,802,662 5,828,070 7,504,646 7,504,646 July 25, 2005........ 4,296,408 4,296,408 5,579,460 5,828,070 7,025,932 7,025,932 October 25, 2005..... 4,296,408 4,296,408 5,300,228 5,323,464 7,025,932 7,025,932 January 25, 2006..... 4,065,135 4,065,135 5,300,228 5,323,464 7,025,932 7,025,932 April 25, 2006....... 4,065,135 4,065,135 5,300,228 5,323,464 6,775,311 6,775,311 July 25, 2006........ 4,065,135 4,065,135 5,088,049 5,323,464 6,467,433 6,467,433 October 25, 2006..... 4,065,135 4,065,135 4,819,839 4,840,998 6,467,433 6,467,433 January 25, 2007..... 3,671,427 3,671,427 4,819,839 4,840,998 6,467,433 6,467,433 April 25, 2007....... 3,671,427 3,671,427 4,819,839 4,840,998 6,228,076 6,228,076 July 25, 2007........ 3,671,427 3,671,427 4,618,682 4,840,998 5,931,462 5,931,462 October 25, 2007..... 3,671,427 3,671,427 4,361,494 4,380,672 5,931,462 5,931,462 January 25, 2008..... 0 0 0 0 0 0
So long as there is no payment default under any other Indenture, all of the Equipment Notes issued with respect to a Non-Core Aircraft may be redeemed in whole prior to maturity at any time at the option of Delta, at a price equal to the aggregate unpaid principal amount thereof, together with accrued and unpaid interest thereon to (but excluding) the date of redemption, Break Amount (if any) plus the Make-Whole Amount for the applicable series of Equipment Notes. Equipment Notes issued with respect to any Core Aircraft may not be optionally redeemed by Delta at any time prior to maturity. (Indentures, Section 2.11) Notice of optional redemption of Equipment Notes issued with respect to a Non-Core Aircraft and notice of mandatory redemption of Equipment Notes in connection with an Event of Loss to any Aircraft will be given to each holder of such Equipment Notes not less than 15 nor more than 60 days prior to the applicable redemption date. A notice of optional redemption may be revoked not later than three days before the proposed redemption date. (Indentures, Sections 2.11 and 2.12) "Break Amount" means, as of any date of payment, redemption or acceleration of any Equipment Note (the "Applicable Date"), an amount determined by the Reference Agent on the date that is two Business Days prior to the Applicable Date pursuant to the formula set forth below; provided, however, that no Break Amount will be payable (x) if the Break Amount, as calculated pursuant to the formula set forth below, is equal to or less than zero or (y) on or in respect of any Applicable Date that is a payment date, Break Amount = Z -- Y Where: X = with respect to any applicable Interest Period, the sum of (i) the amount of the outstanding principal amount of such Equipment Note as of the first day of the then applicable Interest Period plus (ii) interest payable thereon during such entire Interest Period at then effective LIBOR, 84 Y = X, discounted to present value from the last day of the then applicable Interest Period to the Applicable Date, using then effective LIBOR as the discount rate, Z = X, discounted to present value from the last day of the then applicable Interest Period to the Applicable Date, using a rate equal to the applicable London interbank offered rate for a period commencing on the Applicable Date and ending on the last day of the then applicable Interest Period, determined by the Reference Agent as of two Business Days prior to the Applicable Date as the discount rate. "Core Aircraft" means the Aircraft with the following registration numbers (and any aircraft substituted therefor): N3760C, N3761R, N193DN, N194DN, N1611B and N178DZ. "Final Payment Date" means January 25, 2008 (or if such date is not a Business Day, the next succeeding Business Day). The "Make-Whole Amount" with respect to the Series G Equipment Notes to be redeemed on any redemption date will be an amount equal to the following percentage of the principal amount of the Series G Equipment Notes redeemed:
IF REDEEMED DURING THE YEAR PRIOR TO THE ANNIVERSARY OF THE CLOSING DATE INDICATED BELOW: PERCENTAGE: - ----------------------------------------------------------- ----------- 1st......................................................... 1.50% 2nd......................................................... 1.00% 3rd......................................................... 0.50% 4th and thereafter.......................................... 0.00%
There is no Make-Whole Amount with respect to the Class C or Class D Equipment Notes. (Indentures, Schedule I). "Non-Core Aircraft" means the Aircraft with the following registration numbers (and any aircraft substituted therefor): N195DN, N196DN, N197DN, N198DN, N1612T and N1613B. Upon the occurrence of an Event of Default under an Indenture, any excess proceeds realized from the sale of the Aircraft or the exercise of other remedies under such Indenture will be applied to redeem the Equipment Notes under other Indentures in accordance with the third paragraph under "-- Security". SECURITY The Equipment Notes issued with respect to each Aircraft are secured by a security interest in the Aircraft, certain limited rights under the aircraft purchase agreement between Delta and Boeing, certain requisition and insurance proceeds with respect to such Aircraft and all proceeds of the foregoing. (Indentures, Granting Clause). The Equipment Notes are cross-collateralized to the extent provided in the Indentures, as summarized below. The proceeds realized from the sale of an Aircraft or the exercise of other remedies by the Loan Trustee under an Indenture will be allocated, after paying certain administrative expenses or other related amounts, in the following order: - to pay all amounts due and payable on all of the Equipment Notes issued under such Indenture, in accordance with the priorities set forth therein; - to pay to the Loan Trustee under the other Indentures relating to the Core Aircraft an amount up to the outstanding principal of, and unpaid interest accrued on, the Series G Equipment Notes issued thereunder on a pro rata basis; 85 - to pay to the Loan Trustee under the other Indentures relating to the Non-Core Aircraft an amount up to the outstanding principal of, and unpaid interest accrued on, the Series G Equipment Notes issued thereunder on a pro rata basis; - to pay to the Loan Trustee under the other Indentures an amount up to the outstanding principal of, and unpaid interest accrued on, the Series C Equipment Notes issued thereunder on a pro rata basis; and - to pay to the Loan Trustee under the other Indentures an amount up to the outstanding principal of, and unpaid interest accrued on, the Series D Equipment Notes issued thereunder on a pro rata basis. In addition, if all amounts owing under any Equipment Note are not paid in full on the Final Payment Date, the Loan Trustees will be able to exercise remedies under all remaining Indentures, including the sale of all Aircraft, to satisfy the remaining amounts due under any Equipment Note. Such payment default at the Final Payment Date is the only cross-collateralization provision under the Indenture. Therefore, until the Final Payment Date, if the Equipment Notes issued under one or more Indentures are in default and the Equipment Notes issued under the remaining Indentures are not in default, no remedies will be exercisable under such remaining Indentures. If, at any time before the Final Payment Date, the Equipment Notes issued under an Indenture are repaid in full (other than as a result of the exercise of remedies thereunder), the lien under such Indenture will be released and will not thereafter secure any other Equipment Notes. LOAN TO VALUE RATIOS OF EQUIPMENT NOTES The tables in Appendix IV set forth Loan to Aircraft value ratios for the Equipment Notes issued in respect of each Aircraft as of the Issuance Date and each January 25 Regular Distribution Date. The LTVs were obtained by dividing (i) the outstanding principal amount (assuming no payment default or early redemption) of such Equipment Notes determined immediately after giving effect to the payments scheduled to be made on each such Regular Distribution Date by (ii) assumed aircraft value (the "Assumed Aircraft Value"), calculated based on the Depreciation Assumption, of the Aircraft securing such Equipment Notes. The tables in Appendix IV are based on the assumption (the "Depreciation Assumption") that the Assumed Aircraft Value of each Aircraft depreciates annually by approximately 3% of the appraised base value at delivery. The appraised base value at delivery of an Aircraft is the theoretical value that when depreciated at 3% per year from the initial delivery of such Aircraft by the manufacturer, results in the appraised base value of such Aircraft specified under "Summary -- Equipment Notes and the Aircraft." Other rates or methods of depreciation would result in materially different LTVs, and no assurance can be given (i) that the depreciation rate and method assumed for the purposes of the tables are the ones most likely to occur or (ii) as to the actual future value of any Aircraft. Thus the tables should not be considered a forecast or prediction of expected or likely LTVs, but simply a mathematical calculation based on one set of assumptions. LIMITATION OF LIABILITY Except as otherwise provided in the Indentures, no Loan Trustee, in its individual capacity, is answerable or accountable under the Indentures or the Equipment Notes under any circumstances except, among other things, for its own willful misconduct or negligence. INDENTURE EVENTS OF DEFAULT, NOTICE AND WAIVER "Indenture Events of Default" under each Indenture will include: - the failure by Delta to pay any interest, principal, Break Amount, (if any) or Make-Whole Amount (if any) within 15 days after the same has become due on any Equipment Note; 86 - the failure by Delta to pay any amount (other than interest, principal, Break Amount (if any) or Make-Whole Amount (if any)) when due under the Indenture, any Equipment Note or any other operative documents for more than 30 days after Delta receives written notice; - the failure by Delta to carry and maintain insurance or indemnity on or with respect to the Aircraft in accordance with the provisions of such Indenture; provided that no such failure to carry and maintain insurance will constitute an Indenture Event of Default until the earlier of (i) the date such failure has continued unremedied for a period of 30 days after the Loan Trustee receives notice of the cancellation or lapse of such insurance or (ii) the date such insurance is not in effect as to the Loan Trustee; - the failure by Delta to perform or observe any other covenant or condition to be performed or observed by it under any operative document that continues for a period of 60 days after Delta receives written notice; provided that if such failure is capable of being remedied, no such failure will constitute an Indenture Event of Default for a period of one year after such notice is received by Delta so long as Delta is diligently proceeding to remedy such failure; - any representation or warranty made by Delta in the related operative documents proves to have been incorrect in any material respect when made, and such incorrectness continues to be material to the transactions contemplated by the Indenture and remains unremedied for a period of 60 days after Delta receives written notice; provided that, if such incorrectness is capable of being remedied, no such incorrectness will constitute an Indenture Event of Default for a period of one year after such notice is received by Delta so long as Delta is diligently proceeding to remedy such incorrectness; - the occurrence of certain events of bankruptcy, reorganization or insolvency of Delta; or - if any amounts in respect of the Equipment Notes issued under such Indenture or Equipment Notes issued under the other Indentures, including any payment of interest, principal, Break Amount, (if any) or Make-Whole Amount (if any) on any such Equipment Note has not be paid in full on the Final Payment Date. (Indentures, Section 4.01). The only cross-default provision in the Indentures is an event of default under each Indenture which occurs if all amounts owing under any Equipment Note are not paid in full on the Final Payment Date. Consequently, until the Final Payment Date, events resulting in an Indenture Event of Default under any particular Indenture may or may not result in an Indenture Event of Default occurring under any other Indenture. Until the Final Payment Date, if the Equipment Notes issued with respect to one or more Aircraft are in default and the Equipment Notes issued with respect to the remaining Aircraft are not in default, no remedies will be exercisable under the Indentures with respect to such remaining Aircraft. Each Indenture provides that the holders of a majority in aggregate unpaid principal amount of the Equipment Notes outstanding under such Indenture, by written instruction to the Loan Trustee, may on behalf of all the Noteholders waive any existing default and its consequences under such Indenture, except a default in the payment of the principal of, Make-Whole Amount (if any), Break Amount (if any) or interest due under any such Equipment Notes or a default in respect of any covenant or provision of such Indenture that cannot be modified or amended without the consent of each Noteholder. (Indentures, Section 4.05) This provision is subject to the terms of the Intercreditor Agreement. REMEDIES The exercise of remedies under the Indentures will be subject to the terms of the Intercreditor Agreement, and the following description should be read in conjunction with the description of the Intercreditor Agreement. If an Indenture Event of Default occurs and is continuing under an Indenture, the related Loan Trustee may, and upon receipt of written instructions of the holders of a majority in principal amount of the Equipment Notes then outstanding under such Indenture will, declare the principal of all such 87 Equipment Notes issued thereunder immediately due and payable, together with all accrued but unpaid interest thereon (but without any Make-Whole Amount). The holders of a majority in principal amount of Equipment Notes outstanding under an Indenture may rescind any declaration of acceleration of such Equipment Notes if (i) there has been paid to the related Loan Trustee an amount sufficient to pay all overdue installments of principal and interest on any such 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 Indenture 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 cured or waived; provided, that no such rescission or annulment shall extend to or affect any subsequent default or Event of Default or impair any right consequent thereon. (Indentures, Section 4.02(d)). Each Indenture provides that if an Indenture Event of Default under such Indenture has occurred and is continuing, the related Loan Trustee may exercise certain rights or remedies available to it under such Indenture or under applicable law. Such remedies include the right to take possession of the Aircraft and to sell all or any part of the airframe or any engine comprising the Aircraft subject to such Indenture. (Indentures, Section 4.02(a)) If the Equipment Notes issued in respect of one Aircraft are in default, the Equipment Notes issued in respect of the other Aircraft may not be in default, and, if not, no remedies will be exercisable under the applicable Indentures with respect to such other Aircraft. Section 1110 of the Bankruptcy Code ("Section 1110") provides that, subject to the limitations specified therein, the right of a secured party with a security interest in "equipment" (as defined in Section 1110) to take possession of such equipment in compliance with the provisions of a security agreement and to enforce any of its rights or remedies thereunder is not affected after 60 days after the date of the order for relief in a case under Chapter 11 of the Bankruptcy Code by any provision of the Bankruptcy Code. Section 1110 provides that the right to take possession of an aircraft and enforce other remedies may not be exercised for 60 days following the date of the order for relief in reorganization proceedings and may not be exercised at all after such 60-day period (or such longer period consented to by the holder of a security interest and approved by the court), if the trustee in reorganization agrees, subject to the approval of the court, to perform the debtor's obligations under the security agreement and cures all defaults (other than defaults resulting solely from the financial condition, bankruptcy, insolvency or reorganization of the debtor, the appointment of a trustee or custodian or the failure to satisfy any penalty rate or provision relating to a default arising from any failure by the debtor to perform non-monetary obligations under the applicable agreement). "Equipment" is defined in Section 1110, in part, as "an aircraft, aircraft engine, propeller, appliance, or spare part (as defined in section 40102 of title 49 of the United States Code) that is subject to a security interest granted by, leased to, or conditionally sold to a debtor that, at the time such transaction is entered into, holds an air carrier operating certificate issued pursuant to chapter 447 of title 49 of the United States Code for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo." It was a condition to the Trustee's obligations to purchase Equipment Notes with respect to each Aircraft that Cadwalader, Wickersham & Taft LLP, special counsel to Delta, provide an opinion to the Trustees that, if Delta were to become a debtor under Chapter 11 of the Bankruptcy Code, the Loan Trustee would be entitled to the benefits of Section 1110 with respect to the airframe and engines comprising the Aircraft originally subjected to the lien of the relevant Indenture. This opinion was subject to certain qualifications and assumptions. The opinion of Cadwalader, Wickersham & Taft LLP did not address the possible replacement of an Aircraft after an Event of Loss in the future, the consummation of which is conditioned upon the contemporaneous delivery of an opinion of counsel to the effect that the related Loan Trustee will be entitled to Section 1110 benefits with respect to the replacement airframe unless there is a change in law or court interpretation that results in Section 1110 not being available. See "-- Certain Provisions of the Indentures -- Events of Loss." The opinion of Cadwalader, Wickersham & Taft LLP also did not address 88 the availability of Section 1110 with respect to the bankruptcy proceedings of any possible lessee of an Aircraft if it is leased by Delta. In certain circumstances following the bankruptcy or insolvency of Delta where the obligations of Delta under any Indenture exceed the value of the Aircraft collateral under such Indenture, post-petition interest will not accrue on the related Equipment Notes. In addition, to the extent that distributions are made to any Certificateholders, whether under the Intercreditor Agreement or from drawings on the Liquidity Facilities, in respect of amounts that would have been funded by post-petition interest payments on such Equipment Notes had such payments been made, there would be a shortfall between the claim allowable against Delta on such Equipment Notes after the disposition of the Aircraft collateral securing such Equipment Notes and the remaining balance of the Certificates. Such shortfall would first reduce some or all of the remaining claim against Delta available to the Trustees for the most junior Classes. If an Indenture Event of Default under any Indenture occurs and is continuing, any sums held or received by the related Loan Trustee may be applied to reimburse such Loan Trustee for any tax, expense or other loss incurred by it and to pay any other amounts due to such Loan Trustee prior to any payments to holders of the Equipment Notes issued under such Indenture. (Indentures, Section 3.03) MODIFICATION OF INDENTURES Without the consent of holders of a majority in principal amount of the Equipment Notes outstanding under any Indenture, the provisions of such Indenture and the Participation Agreement may not be amended or modified, except to the extent indicated below. In addition, any Indenture may be amended without the consent of the Noteholders to, among other things, (i) cure any defect or inconsistency in such Indenture or the Equipment Notes issued thereunder (provided that such change does not adversely affect the interests of any Noteholder in its capacity solely as Noteholder); (ii) make any other provisions or amendments with respect to matters or questions arising under such Indenture or such Equipment Notes or to amend, modify or supplement any provision thereof, provided that such action does not adversely affect the interests of any such holder, the Policy Provider or the Liquidity Providers; (iii) cure any ambiguity or correct any mistake; or (iv) provide for compliance with applicable law. (Indentures, Section 9.01) Each Indenture provides that without the consent of the holder of each Equipment Note outstanding under such Indenture affected thereby and the Policy Provider, no amendment or modification of such Indenture may, among other things, (i) reduce the principal amount of, Break Amount (if any), Make-Whole Amount (if any) or interest payable on, any Equipment Notes issued under such Indenture, (ii) 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; (iii) create any lien with respect to the Collateral (as defined in such Indenture) prior to or pari passu with the lien of such Indenture, except as provided in such Indenture, or deprive any holder of an Equipment Note issued under such Indenture of the benefit of the lien of such Indenture upon the Collateral or Indenture Estate or (iv) reduce the percentage in principal amount of outstanding Equipment Notes issued under such Indenture required to take or approve any action under such Indenture. (Indentures, Section 9.02(a)) INDEMNIFICATION Delta is required to indemnify each Loan Trustee, the Liquidity Providers, the Policy Provider, the Subordination Agent, and each Trustee, but not the holders of Certificates, for certain losses, claims and other matters. (Participation Agreements, Section 4.02) The Loan Trustee is not indemnified, however, for actions arising from its negligence or willful misconduct, or for the inaccuracy of any representation or warranty made in its individual capacity under the Indenture. The Loan Trustee will not be required to take any action or refrain from taking any action (other than notifying the Noteholders if it knows of an Event of Default or of a default arising from Delta's failure to pay overdue principal, interest or Break Amount (if any) or Make-Whole Amount (if any) 89 under any Equipment Note) unless it has received indemnification satisfactory to it against any risks incurred in connection therewith. (Indentures, Section 5.03) CERTAIN PROVISIONS OF THE INDENTURES MAINTENANCE AND OPERATION Under the terms of each Indenture, Delta is obligated, among other things and at its expense, to keep each Aircraft duly registered, and to maintain, service and repair the Aircraft (or to cause the same to be done) (i) so as to keep it in such condition as necessary to maintain the airworthiness certificate for the Aircraft in good standing at all times (other than during temporary periods of storage, maintenance, testing or modification or during periods of grounding by applicable governmental authorities) and (ii) using the same standards as Delta (or a lessee, if a lease is in effect) uses with respect to similar aircraft operated by Delta (or such lessee) in similar circumstances. (Indentures, Section 7.02(c) and (e)) Delta has agreed not to maintain, use or operate any Aircraft in violation of any law, rule or regulation of any government having jurisdiction over such Aircraft, or in violation of any airworthiness certificate, license or registration relating to such Aircraft, except to the extent Delta (or any 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 the related Indenture. (Indentures, Section 7.02(b)) Delta must make (or cause to be made) all alterations, modifications and additions to each Airframe and Engine necessary to meet the applicable requirements of the Federal Aviation Administration (the "FAA") or any other applicable governmental authority of another jurisdiction in which the Aircraft may then be registered; provided, however, that Delta (or any lessee) may in good faith contest the validity or application of any such requirement in any manner that does not involve a material risk of sale, forfeiture or loss of the Aircraft and does not adversely affect the Loan Trustee's interest in the Collateral under (and as defined in) the related Indenture. Delta (or any lessee) may add further parts and make other alterations, modifications and additions to any Airframe or any Engine as Delta (or any lessee) deems desirable in the proper conduct of its business, including removal (without replacement) of parts, so long as such alterations, modifications, additions or removals do not materially diminish the value or utility of such Airframe or Engine below its value or utility immediately prior to such alteration, modification, addition or removal (assuming such Airframe or Engine was maintained in accordance with the related Indenture), except that the value (but not the utility) of any Airframe or Engine may be reduced from time to time by the value of any such parts which have been removed that Delta deems obsolete or no longer suitable or appropriate for use on such Airframe or Engine. All parts (with certain exceptions) incorporated or installed in or added to such Airframe or Engine as a result of such alterations, modifications or additions will be subject to the lien of the related Indenture. Delta (or any lessee) is permitted to remove (without replacement) parts which were added by Delta (or any lessee) that are in addition to, and not in replacement of or substitution for, any part originally incorporated or installed in or attached to an Airframe or Engine at the time of delivery thereof to Delta, not required to be incorporated or installed in or attached to any Airframe or Engine pursuant to applicable requirements of the FAA or other jurisdiction in which the Aircraft may then be registered, and can be removed without materially diminishing the requisite value or utility of the Aircraft. (Indentures, Section 7.04 (c)) Except as set forth above, Delta is obligated to replace or cause to be replaced all parts that are incorporated or installed in or attached to any Airframe or any Engine and become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use. Any such replacement parts will become subject the related Indenture in lieu of the part replaced. (Indentures, Section 7.04 (a)) REGISTRATION, LEASING AND POSSESSION Although Delta has no current intention to do so, Delta is permitted to register an Aircraft in certain jurisdictions outside the United States, subject to certain conditions specified in the related Indenture. 90 These conditions include a requirement that the laws of the new jurisdiction of registration will give effect to the lien of and the security interest created by the related Indenture in the applicable Aircraft. (Indentures, Section 7.02 (e)) Delta also is permitted, subject to certain limitations, to lease any Aircraft to any United States certificated air carrier or to certain foreign air carriers. In addition, subject to certain limitations, Delta is permitted to transfer possession of any Airframe or any Engine other than by lease, including transfers of possession by Delta or any lessee in connection with certain interchange and pooling arrangements, transfers to the government of Canada, France, Germany, Japan, The Netherlands, Sweden, Switzerland, the United Kingdom or the United States or any instrumentality or agency thereof, and transfers in connection with maintenance or modifications. There are no general geographical restrictions on Delta's (or any lessee's) ability to operate the Aircraft. The extent to which the relevant Loan Trustee's lien would be recognized in an Aircraft if such Aircraft were located in certain countries is uncertain. In addition, any exercise of the right to repossess an Aircraft may be difficult, expensive and time-consuming, particularly when such Aircraft is located outside the United States or has been registered in a foreign jurisdiction or leased to a foreign operator, and may be subject to the limitations and requirements of applicable law, including the need to obtain consents or approvals for deregistration or re-export of the Aircraft, which may be subject to delays and political risk. When a defaulting lessee or other permitted transferee is the subject of a bankruptcy, insolvency or similar event such as protective administration, additional limitations may apply. (Indentures, Section 7.02(b)). See "Risk Factors -- Risks Factors Relating to the Certificates and the Exchange Offer -- Repossession." In addition, at the time of foreclosing on the lien on the Aircraft under the related Indenture, an Airframe subject to such Indenture, might not be equipped with Engines subject to the same Indenture. If Delta fails to transfer title to engines not owned by Delta that are attached to repossessed Aircraft, it could be difficult, expensive and time-consuming to assemble an Aircraft consisting of an Airframe and Engines subject to the Indenture. LIENS Delta is required to maintain each Aircraft free of any liens, other than the lien of the Indenture and the rights of others under agreements or arrangements permitted by the terms of the related Indenture, and liens attributable to other parties to the operative documents and pass through documents related thereto and other than certain other specified liens, including but not limited to (i) liens for taxes either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk of the sale, forfeiture or loss of the Airframe or any Engine or the Loan Trustee's interest therein or impair the lien of the related Indenture; (ii) materialmen's, mechanics' and other similar liens arising in the ordinary course of business and securing obligations that either are not yet overdue for more than 60 days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk of the sale, forfeiture or loss of the Airframe or any Engine or the Loan Trustee's interest therein or impair the lien of the related Indenture; (iii) judgment liens so long as such judgment is discharged or vacated within 60 days or the execution of such judgment is stayed pending appeal or such judgment is discharged, vacated or reversed within 60 days after expiration of such stay; (iv) salvage or similar rights of insurers under insurance policies maintained by Delta; (v) any other lien as to which Delta has provided a bond or other security adequate in the reasonable opinion of the relevant Loan Trustee and (vi) any lien approved in writing by the Loan Trustee. (Indentures, Section 7.01) INSURANCE Subject to certain exceptions, Delta is required to maintain or cause to be maintained, at its or any lessee's expense, all-risk aircraft hull insurance covering each Aircraft, at all times in an amount not less than 110% of the aggregate outstanding principal amount of the Equipment Notes relating to such Aircraft. However, after giving effect to self-insurance permitted as described below, the amount payable under such insurance may be less than such amounts payable with respect to the Equipment Notes. If an Aircraft suffers an Event of Loss, insurance proceeds up to an amount equal to the outstanding principal 91 amount of the Equipment Notes, together with accrued but unpaid interest thereon, plus an amount equal to the interest that will accrue on the outstanding principal amount of the Equipment Notes during the period commencing on the date following the date of payment of such insurance proceeds to the Loan Trustee and ending on the loss payment date (the sum of those amounts being, the "Loan Amount") will be paid to the applicable Loan Trustee. If an Aircraft or Engine suffers loss or damage not constituting an Event of Loss but involving insurance proceeds in excess of $8,000,000 (in the case of a Boeing 737-832) or $15,000,000 (in the case of a Boeing 767-332ER), proceeds in excess of such specified amounts up to the Loan Amount will be payable to the applicable Loan Trustee and the proceeds up to such specified amounts and proceeds in excess of the Loan Amount will be payable directly to Delta so long as an Indenture Event of Default does not exist. So long as the loss does not constitute an Event of Loss, insurance proceeds will be applied to repair or replace the equipment. (Indentures, Section 7.06) In addition, Delta is obligated to maintain or cause to be maintained aircraft liability insurance at its or any lessee's expense, including, without limitation, bodily injury, personal injury and property damage liability insurance (exclusive of manufacturer's product liability insurance) and contractual liability insurance with respect to each Aircraft. Such liability insurance must be underwritten by insurers of recognized responsibility. The amount of such liability insurance coverage may not be less than the amount of aircraft liability insurance from time to time applicable to similar aircraft in Delta's fleet on which Delta carries insurance. (Indentures, Section 7.06) Delta also is required to maintain or cause to be maintained war-risk insurance with respect to each Aircraft if and to the extent such insurance is maintained by Delta (or any lessee) with respect to other similar aircraft operated by Delta (or such lessee) on the same routes on which the Aircraft is operated. (Indentures, Section 7.06) Delta may self-insure under a program applicable to all aircraft in its fleet, but the amount of such self-insurance in the aggregate may not exceed for any 12-month policy year 1% of the average aggregate insurable value (during the preceding policy year) of all aircraft on which Delta carries insurance, unless an insurance broker of national standing certifies that the standard among other major U.S. airlines is a higher level of self-insurance, in which case Delta may self-insure the Aircraft to such higher level. In addition, Delta may self-insure to the extent of (i) any applicable deductible per Aircraft that is not in excess of the amount customarily allowed as a deductible in the industry or is required to facilitate claims handling, or (ii) any applicable mandatory minimum per aircraft (or, if applicable, per annum or other period) liability insurance or hull insurance deductibles imposed by the aircraft liability or hull insurers. (Indentures, Section 7.06) In respect of each Aircraft, Delta is required to name the relevant Loan Trustee, the Subordination Agent, each Trustee, the Policy Provider and the Liquidity Providers as additional insured parties as their respective interests may appear under all liability insurance policies required by the terms of the Indenture with respect to such Aircraft. In addition, the hull and liability insurance policies will be required to provide that, in respect of the interests of such additional insured party, the insurance shall not be invalidated by any act or omission of Delta. (Indentures, Section 7.02(b)) Subject to certain customary exceptions, Delta may not operate (or permit any lessee to operate) any Aircraft in any area that is excluded from coverage by any insurance policy in effect with respect to such Aircraft and required by the Indenture. (Indentures, 7.06) EVENTS OF LOSS If an Event of Loss occurs with respect to the Airframe or the Airframe and one or more Engines of an Aircraft, Delta must elect within 90 days after such occurrence (i) to replace such Airframe and any such Engines or (ii) to pay the applicable Loan Trustee the outstanding principal amount of the Equipment Notes relating to such Aircraft together with interest accrued thereon. Depending upon Delta's election, not later than the first Business Day after the 120th day following the date of occurrence of such Event of Loss, Delta will (i) redeem the Equipment Notes under the applicable Indenture by paying to the Loan Trustee the outstanding unpaid principal amount of such Equipment Notes, together with 92 accrued interest thereon, but without any Make-Whole Amount and if such Aircraft which suffered such Event of Loss is a Core Aircraft, pursuant to the other Indentures relating to the other Core Aircraft, redeem a portion (as specified in the Indentures relating to the other Core Aircraft) of the Series G Equipment Notes relating to such other Core Aircraft or (ii) substitute an airframe (or airframe and one or more engines, as the case may be) for the Airframe, or Airframe and Engine(s), that suffered such Event of Loss. If Delta elects to replace an Airframe (or Airframe and one or more Engines, as the case may be) that suffered such Event of Loss, it will do so with an airframe or airframe and engines of the same model as the Airframe or Airframe and Engines to be replaced or a comparable or improved model, which airframe has been delivered from the manufacturer no earlier than one year prior to the date that the Airframe being replaced was delivered from the manufacturer, and with a value and utility (without regard to hours or cycles) at least equal to the Airframe or Airframe and Engines to be replaced, assuming that such Airframe and such Engines were in the condition and repair required by the related Indenture. Delta is also required to provide to the relevant Loan Trustee opinions of counsel (i) to the effect that such Loan Trustee will be entitled to the benefits of Section 1110 with respect to the replacement airframe (unless, as a result of a change in law or governmental or judicial interpretation, such benefits were not available with respect to the Aircraft immediately prior to such replacement), and (ii) as to the due registration of the replacement aircraft and the due recordation of a supplement to the Indenture relating to such replacement aircraft and the validity and perfection of the security interest granted to the Loan Trustee in the replacement aircraft. If Delta elects not to replace such Airframe, or Airframe and Engine(s), then upon payment of the outstanding principal amount of the Equipment Notes issued with respect to such Aircraft, together with accrued but unpaid interest thereon and the Break Amount (if any) (but without any Make-Whole Amount), the lien of the Indenture will terminate with respect to such Aircraft, and the obligation of Delta thereafter to make the scheduled interest and principal payments with respect to such Equipment Notes will cease. The payments made under the Indenture by Delta will be deposited with the applicable Loan Trustee. Amounts in excess of the amounts due and owing under the Equipment Notes issued with respect to such Aircraft will be distributed by such Loan Trustee to Delta. (Indentures, Sections 2.10, 3.02, 7.05(a) and 7.05(c)) If an Event of Loss occurs with respect to an Engine alone, Delta is required to replace such Engine within 120 days after the occurrence of such Event of Loss with another engine, free and clear of all liens (other than certain permitted liens). Such replacement engine will be the same model as the Engine to be replaced, or a comparable or improved model of the same or another manufacturer, suitable for installation and use on the Airframe, and will have a value and utility (without regard to hours or cycles) at least equal to the Engine to be replaced, assuming that such Engine was in the condition and repair required by the terms of the relevant Indenture. (Indentures, Section 7.05(b)) An "Event of Loss" with respect to an Aircraft, Airframe or any Engine means any of the following events: - the destruction of such property, damage to such property beyond repair or rendition of such property permanently unfit for normal use; - any damage to such property that results in an insurance settlement with respect to such property on the basis of a total loss or a compromised or constructive total loss; - any theft, hijacking or disappearance of such property for a period exceeding 180 days; - the requisition for use of such property by any government (other than a requisition for use by the government of Canada, France, Germany, Japan, The Netherlands, Sweden, Switzerland, the United Kingdom or the United States or the government of the country of registry of the Aircraft) that results in the loss of possession of such property by Delta (or any lessee) for a period exceeding 12 consecutive months; - the operation or location of the Aircraft, while under requisition for use by any government, in an area excluded from coverage by any insurance policy required by the terms of the Indenture, unless Delta has obtained indemnity or insurance in lieu thereof from such government; 93 - any requisition of title, capture, seizure, deprivation, confiscation or detention (excluding requisition for use or hire not involving a requisition of title) of the Aircraft by any government that results in the loss of title or use of the Aircraft by Delta (or a permitted lessee) for a period in excess of 180 days; - as a result of any law, rule, regulation, order or other action by the FAA or other government of the country of registry, the use of the Aircraft in the normal business of air transportation is prohibited by virtue of a condition affecting all aircraft of the same type for a period of 18 consecutive months, unless Delta is diligently carrying forward all steps that are necessary or desirable to permit the normal use of the Aircraft or, in any event, if such use is prohibited for a period of three consecutive years ; - with respect to any Engine, any divestiture of title to such Engine or, in certain circumstances, the installation of such Engine on an airframe that is subject to a conditional sale or other security agreement. An Event of Loss with respect to an Aircraft is deemed to have occurred if an Event of Loss occurs with respect to the Airframe that is a part of such Aircraft. (Indentures, Annex A) CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES The following is a general discussion of the principal U.S. federal income tax consequences to Certificate Owners that exchange Old Class G Certificates for New Class G Certificates pursuant to the Exchange Offer. The discussion does not address all of the U.S. federal income tax consequences that may be relevant to all Certificate Owners in light of their particular circumstances (including, for example, any special rules applicable to tax-exempt organizations, banks, dealers in securities or commodities, insurance companies and holders that hold Class G Certificates as part of a straddle or holders that have a "functional currency" other than the U.S. dollars). This discussion is addressed to beneficial owners of Class G Certificates that are (i) individual citizens or residents of the United States, (ii) corporations created or organized in or under the laws of the United States, any state thereof or the District of Columbia or (iii) partnerships (including entities treated as partnerships), trusts or estates treated, for U.S. federal income tax purposes, as domestic partnerships, trusts or estates ("U.S. Persons"). This discussion is based upon the tax laws of the United States as in effect on the date hereof, as well as judicial and administrative interpretations thereof (in final or proposed form) available on or before such date. All of the foregoing are subject to change or differing interpretations, which could apply retroactively. No ruling has been or will be sought from the Internal Revenue Service with respect to any of the U.S. federal income tax consequences discussed below, and no assurance can be given that the Internal Revenue Service will not take contrary positions. Certificate Owners should consult their own tax advisors regarding the federal, state, local and any other tax consequences to them of exchanging Old Class G Certificates for New Class G Certificates in light of their own particular circumstances. The exchange of Old Class G Certificates for New Class G Certificates pursuant to the Exchange Offer will not be treated as a taxable event for federal income tax purposes. Receipt of New Class G Certificates in the Exchange Offer will be treated as a continuation of the original investment of the Certificate Owner in the Old Class G Certificates. Similarly, there would be no federal income tax consequences to a Certificate Owner that does not participate in the Exchange Offer. In particular, no gain or loss will be recognized by Certificate Owners as a result of the Exchange Offer and, for purposes of determining gain or loss on a subsequent sale of Certificates, a Certificate Owner's basis and holding period for the Certificates will not be affected by the Exchange Offer. Treasury regulations issued February 28, 2003 directed at tax shelter activity require taxpayers to disclose certain information on Internal Revenue Service Form 8886 if they participate in a "reportable transaction." A transaction may be a "reportable transaction" based upon any of several indicia, including the existence of book-tax differences or the recognition of a loss with respect to an investment in the Class G Certificates in excess of certain thresholds. Certificateholders should consult their own tax advisors concerning any possible disclosure obligation with respect to their investment or the Exchange Offer. 94 CERTAIN ERISA CONSIDERATIONS GENERAL A fiduciary of a retirement plan or other employee benefit plan or arrangement, including for this purpose an individual retirement account, annuity or Keogh plan, that is subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or such a plan or arrangement which is a foreign, church or governmental plan or arrangement exempt from Title I of ERISA and Section 4975 of the Code but subject to a foreign, federal, state, or local law which is substantially similar to the provisions of Title I of ERISA or Section 4975 of the Code (each, a "Similar Law") (in each case, a "Plan"), should consider whether an investment in the Class G Certificates is appropriate for the Plan, taking into account the provisions of the Plan documents, the overall investment policy of the Plan and the composition of the Plan's investment portfolio, as there are imposed on Plan fiduciaries certain fiduciary requirements, including those of investment prudence and diversification and the requirement that a Plan's investments be made in accordance with the documents governing the Plan. Further, a fiduciary should consider the fact that in the future there may be no market in which such fiduciary would be able to sell or otherwise dispose of the Class G Certificates. Any Plan fiduciary which proposes to cause a Plan to purchase Class G Certificates should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and the Code and Similar Law to such an investment, and to confirm that such purchase and holding will not constitute or result in a non-exempt prohibited transaction or any other violation of an applicable requirement of ERISA. PLAN ASSETS ISSUES The Department of Labor has promulgated a regulation, 29 CFR Section 2510.3-101 (the "Plan Asset Regulation"), describing what constitutes the assets of a Plan with respect to the Plan's investment in an entity for purposes of ERISA and Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan invests (directly or indirectly) in a Class G Certificate, the Plan's assets will include both the Class G Certificate and an undivided interest in each of the underlying assets of the corresponding Trust, including the Equipment Notes held by such Trust, unless it is established that equity participation in the Trust by benefit plan investors (including but not limited to Plans and entities whose underlying assets include Plan assets by reason of an employee benefit plan's investment in the entity) is not significant within the meaning of the Plan Asset Regulation. In this regard, the extent to which there is equity participation in a particular Trust by, or on behalf of, benefit plan investors will not be monitored. If the assets of a Trust are deemed to constitute the assets of a Plan, transactions involving the assets of such Trust could be subject to the prohibited transaction provisions of ERISA and Section 4975 of the Code or materially similar provisions of Similar Law unless a statutory or administrative exemption is applicable to the transaction. PROHIBITED TRANSACTION EXEMPTIONS In addition, whether or not the assets of a Trust are deemed to be Plan assets under the Plan Asset Regulation, the fiduciary of a Plan that proposes to purchase and hold any Class G Certificates should consider, among other things, whether such purchase and holding may involve (i) the direct or indirect extension of credit to a party in interest or a disqualified person, (ii) the sale or exchange of any property between a Plan and a party in interest or a disqualified person, or (iii) the transfer to, or use by or for the benefit of, a party in interest or a disqualified person, of any Plan assets. Such parties in interest or disqualified persons could include, without limitation, Delta and its affiliates, the Initial Purchasers, the Trustees, the Liquidity Provider and Ambac. Moreover, if the Class G Certificates are purchased by a Plan and the Certificates of a subordinate Class are held by a party in interest or a disqualified person with respect to such Plan, the exercise by the holder of the subordinate Classes of Certificates of its right to purchase the Class G Certificates upon the occurrence and during the continuation of a Triggering Event 95 could be considered to constitute a prohibited transaction unless a statutory or administrative exemption were applicable. In addition, if the subordinate Classes of Certificates are purchased by a Plan and the Class G Certificates are held by a party in interest or a disqualified person with respect to such Plan, the exercise by the holder of the subordinate Class of Certificates of its right to purchase the Class G Certificates upon the occurrence and during the continuation of a Triggering Event could be considered to constitute a prohibited transaction unless a statutory or administrative exemption were applicable. Depending on the satisfaction of certain conditions which may include the identity of the Plan fiduciary making the decision to acquire or hold the Class G Certificates on behalf of a Plan, Prohibited Transaction Class Exemption ("PTCE") 91-38 (relating to investments by bank collective investment funds), PTCE 84-14 (relating to transactions effected by a "qualified professional asset manager"), PTCE 95-60 (relating to investments by an insurance company general account), PTCE 96-23 (relating to transactions directed by an in-house asset manager) or PTCE 90-1 (relating to investments by insurance company pooled separate accounts) (collectively, the "Class Exemptions") could provide an exemption from the prohibited transaction provisions of ERISA and Section 4975 of the Code. However, there can be no assurance that any of these Class Exemptions or any other exemption will be available with respect to any particular transaction involving the Certificates. EACH PERSON WHO ACQUIRES OR ACCEPTS A CLASS G CERTIFICATE OR AN INTEREST THEREIN WILL BE DEEMED BY SUCH ACQUISITION OR ACCEPTANCE TO HAVE REPRESENTED AND WARRANTED THAT EITHER: (I) NO ASSETS OF A PLAN OR ANY TRUST ESTABLISHED WITH RESPECT TO A PLAN HAVE BEEN USED TO ACQUIRE SUCH CLASS G CERTIFICATE OR AN INTEREST THEREIN OR (II) THE PURCHASE AND HOLDING OF SUCH CLASS G CERTIFICATE OR AN INTEREST THEREIN BY SUCH PERSON ARE EXEMPT FROM THE PROHIBITED TRANSACTION RESTRICTIONS OF ERISA AND THE CODE OR MATERIALLY SIMILAR PROVISIONS OF SIMILAR LAW PURSUANT TO ONE OR MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS. SPECIAL CONSIDERATIONS APPLICABLE TO INSURANCE COMPANY GENERAL ACCOUNTS Any insurance company proposing to purchase Class G Certificates should consider the implications of the United States Supreme Court's decision in John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank, 510 U.S. 86, 114 S. Ct. 517 (1993), which in certain circumstances treats such general account assets as assets of a Plan that owns a policy or other contract with such insurance company, as well as the effect of Section 401(c) of ERISA as interpreted by regulations issued by the United States Department of Labor in January, 2000 (the "General Account Regulations"). The General Account Regulations should not, however, adversely affect the applicability of PTCE 95-60 to purchases of the Class G Certificates by insurance company general accounts. The plan asset status of insurance company separate accounts is unaffected by Section 401(c) of ERISA, and separate account assets continue to be treated as the assets of any Plan invested in a separate account, except to the extent provided in the Plan Asset Regulation. EACH PLAN FIDUCIARY SHOULD CONSULT WITH ITS LEGAL ADVISOR CONCERNING THE POTENTIAL CONSEQUENCES TO THE PLAN UNDER ERISA, THE CODE OR SIMILAR LAW OF AN INVESTMENT IN ANY OF THE CLASS G CERTIFICATES. PLAN OF DISTRIBUTION Each broker-dealer that receives New Class G Certificates for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Class G Certificates. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Class G Certificates received in exchange for Old Class G Certificates where such Old Class G Certificates were acquired as a result of market-making activities or other trading activities. We have agreed that for a period of 90 days after the Expiration Date, we will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. 96 We will not receive any proceeds from any sale of New Class G Certificates by broker-dealers. New Class G Certificates received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Class G Certificates or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such New Class G Certificates. Any broker-dealer that resells New Class G Certificates that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such New Class G Certificates may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit of any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a Prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 90 days after the Expiration Date, Delta will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. Delta has agreed to pay all expenses incident to the Exchange Offer other than commissions or concessions of any brokers or dealers and will indemnify the holders of the Class G Certificates (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. LEGAL OPINIONS The validity of the New Class G Certificates is being passed upon for Delta by Cadwalader, Wickersham & Taft LLP, New York, New York, special counsel to Delta. EXPERTS The consolidated balance sheet as of December 31, 2001 and the related consolidated statements of operations, cash flows and shareowners' equity for each of the years ended December 31, 2001, 2000, 1999 and 1998 and related schedules incorporated by reference in the Prospectus have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. Reference is made to said report, which includes an explanatory paragraph with respect to the change in the methods of accounting for derivative instruments and hedging activities as discussed in Note 4 to the audited consolidated financial statements. Arthur Andersen LLP has ceased operations in the U.S. On March 6, 2002, Delta's Board of Directors decided to retain Deloitte & Touche LLP as Delta's independent public accountants and dismissed Arthur Andersen LLP, Delta's former auditors. There were no disagreements with the former auditors on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure at the time of the change or with respect to Delta's financial statements for fiscal years 1998, 1999, 2000 and 2001, which, if not resolved to the former auditor's satisfaction, would have caused them to make reference to the subject matter of the disagreement in connection with their report. Prior to retaining Deloitte & Touche LLP, Delta had not consulted with Deloitte & Touche LLP regarding accounting principles. The consolidated balance sheet as of December 31, 2002 and the related consolidated statements of operations, cash flows and shareowners' equity for the year ended December 31, 2002, incorporated by reference in this Prospectus from the Company's Annual Report on Form 10-K for the year ended December 31, 2002, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report (which report expresses an unqualified opinion and includes explanatory paragraphs relating to (1) the Company's change in its method of accounting for goodwill and other intangible assets to conform with Statement of Financial Accounting Standards No. 142 and (2) the application of procedures relating to certain revised disclosures in Notes 5, 9, 17 and 21 related to the 2001 and 2000 consolidated financial 97 statements that were audited by other auditors who have ceased operations and for which Deloitte & Touche LLP have expressed no opinion or other form of assurance other than with respect to such disclosures), which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. With respect to the unaudited interim financial information for the periods ended March 31, 2003, and 2002, which is incorporated herein by reference, Deloitte & Touche LLP have applied limited procedures in accordance with professional standards for a review of such information. However, as stated in their report included in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 and incorporated by reference herein, they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. Deloitte & Touche LLP is not subject to the liability provisions of Section 11 of the Securities Act for their report on the unaudited interim financial information because that report is not a "report" or a "part" of the Registration Statement prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. The consolidated financial statements of Ambac and subsidiaries as of December 31, 2002 and 2001 and for each of the years in the three-year period ended December 31, 2002 incorporated by reference in this Prospectus, have been incorporated herein in reliance on the report of KPMG LLP, independent certified public accountants, given on the authority of that firm as experts in accounting and auditing. Such financial statements have been audited by KPMG LLP independent certified public accountants, to the extent and with respect to the periods indicated in respect thereon. APPRAISERS The references to AISI, AvSolutions and BK, and to their respective appraisal reports, are included herein in reliance upon the authority of each such firm as an expert with respect to the matters contained in its appraisal report. 98 APPENDIX I INDEX OF DEFINED TERMS The following is an index showing the page in this Prospectus where certain defined terms appear.
DEFINED TERM PAGE - ------------ ---- 2000 Plan............................ 41 Above-Cap Account.................... 66 Above-Cap Liquidity Facility......... 65 Above-Cap Liquidity Guarantor........ 67 Above-Cap Liquidity Provider......... 65 Above-Cap Payment.................... 65 Above-Cap Reserve Account............ 65 Above-Cap Reserve Amount............. 66 Adjusted Expected Distributions...... 78 Agent's Message...................... 36 Aggregate LTV Collateral Amount...... 78 Aircraft............................. 80 AISI................................. 80 ALPA................................. 24 Ambac................................ 41 Applicable Date...................... 84 Appraised Current Market Value....... 79 Appraisers........................... 80 Appropriations Act................... 23 ASA.................................. 24 Assumed Aircraft Value............... 86 ATOP................................. 36 AvSolutions.......................... 80 Bankruptcy Code...................... 52 Base Rate............................ 63 Basic Agreement...................... 44 Book-Entry Confirmation.............. 34 Break Amount......................... 84 BK................................... 80 Business Day......................... 47 Capped Interest Rate................. 60 Capped LIBOR......................... 65 Cede................................. 49 Certificate Account.................. 47 Certificate Owner.................... 57 Certificate Owners................... 57 Certificateholders................... 44 Certificates......................... 44 citizen of the United States......... 52 Class C Certificateholders........... 44
DEFINED TERM PAGE - ------------ ---- Class C Certificates................. 44 Class C Trust........................ 44 Class C Trustee...................... 44 Class D Certificateholders........... 44 Class D Certificates................. 44 Class D Trust........................ 44 Class D Trustee...................... 44 Class Exemptions..................... 96 Class G Certificateholders........... 44 Class G Certificates................. 44 Class G Trust........................ 44 Class G Trustee...................... 44 Code................................. 95 Commission........................... iv Controlling Party.................... 72 Core Aircraft........................ 85 Current Distribution Date............ 76 default.............................. 51 Defaulted Series G Equipment Note.... 13 Delta................................ iv Depreciation Assumption.............. 86 Disposition.......................... 13 Distribution Date.................... 46 Downgrade Drawing.................... 61 Drawing.............................. 63 DTC.................................. 49 DTC Participants..................... 57 Election Distribution Date........... 69 Eligible Institution................. 34 Equipment Notes...................... 80 ERISA................................ 95 event of default..................... 51 Event of Loss........................ 93 Excess Reimbursement Obligations..... 76 Exchange Act......................... iii Exchange Agent....................... 2 Exchange Offer....................... 31 Expected Distributions............... 76 FAA.................................. 90 Final Distributions.................. 73
I-1
DEFINED TERM PAGE - ------------ ---- Final Drawing........................ 63 Final Legal Distribution Date........ 46 Final Payment Date................... 85 GECC................................. 40 General Account Regulations.......... 96 Global Certificates.................. 56 Indenture............................ 80 Indenture Events of Default.......... 86 Indirect Participants................ 57 Initial Purchasers................... 1 Insolvency Proceeding................ 71 Intercreditor Agreement.............. 71 Interest Drawings.................... 59 Interest Period...................... 82 Issuance Date........................ 31 Letter of Transmittal................ 2 LIBOR................................ 82 Liquidity Event of Default........... 64 Liquidity Expenses................... 75 Liquidity Facilities................. 59 Liquidity Facility LIBOR............. 63 Liquidity Obligations................ 75 Liquidity Providers.................. 65 Loan Amount.......................... 92 Loan Trustee......................... 80 London Banking Day................... 63 LTV Appraisal........................ 79 LTV Collateral Amount................ 78 LTV Ratio............................ 79 LTVs................................. 7 Make-Whole Amount.................... 85 Maximum Available Commitment......... 60 Minimum Sale Price................... 73 Moody's.............................. 29 New Class G Certificates............. 1 Non-Core Aircraft.................... 85 Non-Extension Drawing................ 62 Non-Performing Equipment Notes....... 78 Noteholder........................... 51 Old Class G Certificates............. 1 Order................................ 71 Participation Agreement.............. 81 Pass Through Trust Agreements........ 44 Performing Equipment Note............ 61
DEFINED TERM PAGE - ------------ ---- Permitted Investments................ 50 Pilots Program....................... 41 Plan................................. 95 Plan Asset Regulation................ 95 Policy............................... 68 Policy Account....................... 70 Policy Drawing....................... 76 Policy Expenses...................... 75 Policy Fee Letter.................... 71 Policy Provider...................... 41 Policy Provider Agreement............ 71 Policy Provider Default.............. 73 Policy Provider Election............. 69 Policy Provider Interest Amount...... 75 Policy Provider Obligations.......... 75 Pool Balance......................... 47 Pool Factor.......................... 48 Preference Amount.................... 71 Prior Funds.......................... 12 Primary Cash Collateral Account...... 61 Primary Liquidity Facility........... 59 Primary Liquidity Provider........... 59 Prospectus........................... iii PTC Event of Default................. 52 PTCE................................. 96 Rating Agencies...................... 29 Reference Agency Agreement........... 82 Reference Agent...................... 82 Reference Date....................... 82 Registration Event................... 31 Registration Rights Agreement........ 31 Registration Statement............... iv Regular Distribution Dates........... 46 Replacement Above-Cap Liquidity Facility........................... 66 Replacement Primary Liquidity Facility........................... 61 Required Amount...................... 60 Scheduled Payments................... 46 SEC.................................. iv Section 1110......................... 88 Section 1110 Period.................. 61 Securities Act....................... iii Series C Equipment Notes............. 80 Series D Equipment Notes............. 80 Series G Equipment Notes............. 80
I-2
DEFINED TERM PAGE - ------------ ---- Shelf Registration Statement......... 31 Similar Law.......................... 95 Special Distribution Date............ 46 Special Payment...................... 46 Special Payments Account............. 46 Stabilization Act.................... 20 Standard & Poor's.................... 9 Stated Interest Rate................. 45 Subordination Agent.................. 71 Termination Notice................... 64
DEFINED TERM PAGE - ------------ ---- Threshold Rating..................... 62 Transportation Code.................. 52 Triggering Event..................... 74 Trust Indenture Act.................. 53 Trust Property....................... 44 Trust Supplement..................... 44 Trustees............................. 44 Trusts............................... 44 U.S. Persons......................... 94
I-3 APPENDIX II APPRAISAL LETTERS II-1 [AIRCRAFT INFORMATION SERVICES, INC. LOGO] Delta Air Lines Hartsfield International Airport Atlanta, GA 30320 Half-Life Base Value Opinion 12 Selected Delta Aircraft AISI File No.: A3S007BVO 21 January 2003 Headquarters, 26072 Merit Circle, Suite 123, Laguna Hills, CA 92653 TEL: 949-582-8888 FAX: 949-582-8887 E-MAIL: AISINews@aol.com [AIRCRAFT INFORMATION SERVICES, INC. LOGO] 21 January 2003 Delta Air Lines Hartsfield International Airport Atlanta, GA 30320 Subject: Half-Life Base Value Opinion - 12 Aircraft AISI File number: A3S007BVO Ref: (a) Fax correspondence - Delta Air Lines to AISI 26 August 2002 (b) Salomon Smith Barney Telcon - 21 January 2003 Dear Ladies and Gentlemen: Aircraft Information Services, Inc. (AISI) is pleased to offer our opinion to Delta Air Lines (Delta) of the half-life base values of the Fleet of 12 selected Delta Aircraft as identified and defined in Table I and reference (a) data above (the 'Aircraft'). 1. Methodology and Definitions The standard terms of reference for commercial aircraft value are 'base value' and 'current market value' of an 'average' aircraft. Base value is a theoretical value that assumes a hypothetical balanced market while current market value is the value in the real market; both assume a hypothetical average aircraft condition. All other values are derived from these values. AISI value definitions are consistent with the current definitions of the International Society of Transport Aircraft Trading (ISTAT), those of 01 January 1994. AISI is a member of that organization and employs an ISTAT Certified and Senior Certified Appraiser. AISI defines a 'base value' as that of a transaction between an equally willing and informed buyer and seller, neither under compulsion to buy or sell, for a single unit cash transaction with no hidden value or liability, with supply and demand of the sale item roughly in balance and with no event which would cause a short term change in the market. Base values are typically given for aircraft in 'new' condition, 'average half-life' condition, or 'adjusted' for an aircraft in a specifically described condition at a specific time. An 'average' aircraft is an operable airworthy aircraft in average physical condition and with average accumulated flight hours and cycles, with clear title and standard unrestricted certificate of airworthiness, and registered in an authority which does not represent a penalty to aircraft value or liquidity, with no damage history and with inventory configuration and level of modification which is normal for its intended use and age. AISI assumes average condition unless otherwise specified in this report. Headquarters, 26072 Merit Circle, Suite 123, Laguna Hills, CA 92653 TEL: 949-582-8888 FAX: 949-582-8887 E-MAIL: AISINews@aol.com [AIRCRAFT INFORMATION SERVICES, INC. LOGO] 21 January 2003 AISI File No. A3S007BVO Page -2- AISI also assumes that airframe, engine and component maintenance and essential records are sufficient to permit normal commercial operation under a strict airworthiness authority. 'Half-life' condition assumes that every component or maintenance service which has a prescribed interval that determines its service life, overhaul interval or interval between maintenance services, is at a condition which is one-half of the total interval. An 'adjusted' appraisal reflects an adjustment from half life condition for the actual condition, utilization, life remaining or time remaining of an airframe, engine or component. It should be noted that AISI and ISTAT value definitions apply to a transaction involving a single aircraft, and that transactions involving more than one aircraft are often executed at considerable and highly variable discounts to a single aircraft price, for a variety of reasons relating to an individual buyer or seller. AISI defines a 'current market value', which is synonymous with the older term `fair market value' as that value which reflects the real market conditions including short term events, whether at, above or below the base value conditions. Assumption of a single unit sale and definitions of aircraft condition, buyer/seller qualifications and type of transaction remain unchanged from that of base value. Current market value takes into consideration the status of the economy in which the aircraft is used, the status of supply and demand for the particular aircraft type, the value of recent transactions and the opinions of informed buyers and sellers. Current market value assumes that there is no short term time constraint to buy or sell. AISI encourages the use of base values to consider historical trends, to establish a consistent baseline for long term value comparisons and future value considerations, or to consider how actual market values vary from theoretical base values. Base values are less volatile than current market values and tend to diminish regularly with time. Base values are normally inappropriate to determine near term values. AISI encourages the use of current market values to consider the probable near term value of an aircraft. If more than one aircraft is contained in this report than it should be noted that the values given are not directly additive, that is, the total of the given values is not the value of the fleet but rather the sum of the values of the individual aircraft if sold individually over time so as not to exceed demand. [AIRCRAFT INFORMATION SERVICES, INC. LOGO] 21 January 2003 AISI File No. A3S007BVO Page -3- 2. Valuation The aircraft are valued predicated upon the reference (a) and (b) data which describes the aircraft MTOW and any engine or equipment upgrades. Following is AISI's opinion of the half-life base value for the subject aircraft in January 2003 US dollars. Valuations are presented in Table I subject to the assumptions, definitions and disclaimers herein. The terrorist actions that occurred in the United States on 11 September 2001 have had a significant negative effect on current market values of all commercial aircraft as demand for air travel has declined sharply. The amount of decline varies considerably with new aircraft affected the least and older aircraft affected the most. The present used aircraft market is considered to be a distressed market and is very tenuous, with very few transactions upon which to determine value opinions. Base value opinions normally decline regularly with time; declines of base value in excess of the norm have occurred only where irreversible market changes have occurred with regard to specific aircraft types in the judgment of AISI. Typically an irreversible market change occurs when it is believed that the decline in current market value is permanent, thus causing a corresponding but usually smaller decline in base value. [AIRCRAFT INFORMATION SERVICES, INC. LOGO] 21 January 2003 AISI File No. A3S007BVO Page -4- Table I
Aircraft Manufacturer's Aircraft Registration Half-Life Base Value Delivery Date Serial Number Number January 2003 US Dollars Boeing 737-832; CFM56-7B26, 157,200 lb. mtow Dec-01 30816 N3760C 40,950,000 Dec-01 29628 N3761R 40,950,000 Boeing 767-300ER; PW4060, 407,000 lb. mtow Aug-97 28450 N193DN 65,310,000 Sep-97 28451 N194DN 65,310,000 Sep-97 28452 N195DN 65,310,000 Oct-97 28453 N196DN 65,310,000 Dec-97 28454 N197DN 65,310,000 Feb-98 28455 N198DN 68,310,000 Boeing 767-300ER; CF6-80C2B6F, 407,000 lb. mtow May-00 30595 N1611B 74,280,000 May-01 30575 N1612T 78,190,000 Aug-01 32776 N1613B 78,190,000 May-00 30596 N178DZ 74,280,000
[AIRCRAFT INFORMATION SERVICES, INC. LOGO] 21 January 2003 AISI File No. A3S007BVO Page -5- Unless otherwise agreed by Aircraft Information Services, Inc. (AISI) in writing, this report shall be for the sole use of the client/addressee. This report is offered as a fair and unbiased assessment of the subject aircraft or equipment. AISI has no past, present, or anticipated future interest in the subject aircraft or equipment. The conclusions and opinions expressed in this report are based on published information, information provided by others, reasonable interpretations and calculations thereof and are given in good faith. Such conclusions and opinions are judgments that reflect conditions and values which are current at the time of this report. The values and conditions reported upon are subject to any subsequent change. AISI shall not be liable to any party for damages arising out of reliance or alleged reliance on this report, or for any party's action or failure to act as a result of reliance or alleged reliance on this report. Sincerely, AIRCRAFT INFORMATION SERVICES, INC. (John McNicol Signature) John McNicol Vice President Appraisals & Forecasts LOGO January 21, 2003 Delta Air Lines, Inc. Paul A. Jacobson Manager -- Capital Markets Post Office Box 20534 Atlanta, GA 30320-2534 Dear Mr. Jacobson: AvSOLUTIONS is pleased to provide its opinion of the base values as of January 2003 of two Boeing 737-800 aircraft and ten (10) Boeing 767-300ER aircraft (collectively, the "Aircraft"). A list of the twelve (12) aircraft, along with their delivery dates, engine types, serial numbers, and Maximum Take-Off Weights is provided as Attachment 1 of this document. Set forth below is a summary of the methodology, considerations and assumptions utilized in this appraisal. BASE VALUE Base value is the appraiser's opinion of the underlying economic value of an aircraft in an open, unrestricted, stable market environment with a reasonable balance of supply and demand, and assumes full consideration of its "highest and best use". An aircraft's base value is founded in the historical trend of values and in the projection of future value trends and presumes an arm's length, cash transaction between willing, able and knowledgeable parties acting prudently, with an absence of duress and with a reasonable period of time available for marketing. APPRAISAL METHODOLOGY The method employed by AvSOLUTIONS to appraise the base values and fair market values of aircraft and associated equipment addresses the factors that influence the market value of an aircraft, such as its age, condition, configuration, the population of similar aircraft, similar aircraft on the market, operating costs, cost to acquire a new aircraft, and the state of demand for transportation services. To achieve this objective, cross-sectional data concerning the values of aircraft in each of several general categories is collected and analyzed. Cross-sectional data is then compared with reported market values at a specified point in time. Such data reflects the effect of deterioration in aircraft performance due to usage and exposure to the elements, as well as the effect of obsolescence due to the evolutionary development and implementation of new designs and materials. The product of the analysis identifies the relationship between the value of each aircraft and its characteristics, such as age, model designation, service configuration and engine type. Once the LOGO relationship is identified, one can then postulate the effects of the difference between the economic circumstances at the time when the cross-sectional data were collected and the current situation. The manufacturer and size of the aircraft usually determine the specific category to which it is assigned. Segregating the world airplane fleet in this manner accommodates the potential effects of different size and different design philosophies. LIMITING CONDITIONS AND ASSUMPTIONS In order to conduct this valuation, AvSOLUTIONS is primarily relying on information supplied by Delta Air Lines and from data within AvSOLUTIONS' own database. In determining the base value of the Aircraft, the following assumptions have been researched and determined: 1. AvSOLUTIONS has not inspected the Aircraft or their maintenance records; accordingly, AvSOLUTIONS cannot attest to their specific location or condition. 2. The Aircraft have been delivered to Delta Air Lines. 3. The Aircraft are certified, maintained and operated under United States Federal Aviation Regulation (FAR) part 121. 4. All mandatory inspections and Airworthiness Directives have been complied with. 5. The Aircraft have half-time remaining to their next major overhaul or scheduled shop visit on their airframes, engines, landing gear and auxiliary power units. 6. The Aircraft have no damage history. 7. The Aircraft are in good condition. 8. AvSOLUTIONS considers the economic useful life of these aircraft to be at least 32 years. Based upon the above methodology, considerations and assumptions, it is AvSOLUTIONS' opinion that the base values of each Aircraft are as listed in Attachment 1. STATEMENT OF INDEPENDENCE This appraisal report represents the opinion of AvSOLUTIONS, Inc. and is intended to be advisory in nature. Therefore, AvSOLUTIONS assumes no responsibility or legal liability for actions taken or not taken by Delta Air Lines (the "Client") or any other party with regard to the Aircraft. By accepting this report, the Client agrees that AvSOLUTIONS shall bear no responsibil- LOGO ity or legal liability regarding this report. Further, this report is prepared for the exclusive use of the Client and shall not be provided to other parties without AvSOLUTIONS' express consent. AvSOLUTIONS hereby states that this valuation report has been independently prepared and fairly represents the Aircraft and AvSOLUTIONS' opinion of their values. AvSOLUTIONS further states that it has no present or contemplated future interest or association with the Aircraft. Sincerely yours, (Scott E. Daniels Signature) Scott E. Daniels Director, Asset Management LOGO Attachment 1
DELTA AIR LINES Serial Number Registration Delivery Engine MTOW Base Value MSN Number Date Type (lb) $ millions BOEING 737-800 1 30816 N3760C 21-Dec-01 CFM56-7B26 157,200 44.48 2 29628 N3761R 20-Dec-01 CFM56-7B26 157,200 44.48 BOEING 767-300ER 3 28450 N193DN 21-Aug-97 PW4060 407,000 66.93 4 28451 N194DN 26-Sep-97 PW4060 407,000 67.21 5 28452 N195DN 30-Sep-97 PW4060 407,000 67.21 6 28453 N196DN 30-Oct-97 PW4060 407,000 67.49 7 28454 N197DN 23-Dec-97 PW4060 407,000 68.06 8 28455 N198DN 02-Feb-98 PW4060 407,000 68.63 9 30595 N1611B 15-May-00 CF6-80C2B6F 407,000 76.78 10 30575 N1612T 26-May-01 CF6-80C2B6F 407,000 80.71 11 32776 N1613B 10-Aug-01 CF6-80C2B6F 407,000 81.73 12 30596 N178DZ 23-May-00 CF6-80C2B6F 407,000 76.78
BK ASSOCIATES, INC. 1295 Northern Boulevard Manhasset, New York 11030 (516) 365-6272 - Fax (516) 365-6287 January 22, 2003 Mr. Paul Jacobson Delta Air Lines Hartsfield International Airport Atlanta, GA 30320 Dear Paul: In response to your request, BK Associates, Inc. is pleased to provide this opinion of the current Base Value on each of 12 commercial jet transport aircraft, identified as the Delta Aircraft Portfolio (Aircraft). The Aircraft are further identified in the attached Figure 1 by type, serial number, registration number, manufacture date, engine model and maximum takeoff weight. Set forth below is a summary of the methodology, considerations and assumptions utilized in this appraisal. CURRENT FAIR MARKET VALUE According to the International Society of Transport Aircraft Trading's (ISTAT) definition of FMV, to which BK Associates subscribes, the quoted FMV is the Appraiser's opinion of the most likely trading price that may be generated for an aircraft under the market circumstances that are perceived to exist at the time in question. The FMV assumes that the aircraft is valued for its highest and best use, that the parties to the hypothetical sale transaction are willing, able, prudent and knowledgeable, and under no unusual pressure for a prompt sale, and that the transaction would be negotiated in an open and unrestricted market on an arm's length basis, for cash or equivalent consideration, and given an adequate amount of time for effective exposure to prospective buyers, which BK Associates considers to be 12 to 18 months. BASE VALUE Base value is the Appraiser's opinion of the underlying economic value of an aircraft in an open, unrestricted, stable market environment with a reasonable balance of supply and demand, and assumes full consideration of its "highest and best use". An aircraft's base value is founded in the historical trend of values and in the projection of future value trends and presumes an arm's length, cash transaction between willing, able and knowledgeable parties, acting prudently, with an absence of duress and with a reasonable period of time available for marketing. January 22, 2003 Page 2 VALUE METHODOLOGY As the definition suggests, Base Value is determined from historic and future value trends and is not influenced by current market conditions. It is often determined as a function of the original cost of the aircraft, technical characteristics of competing aircraft, and development of new models. BK Associates has determined from analysis of historic data, a relationship between aircraft age and its value as a percentage of original value for the average aircraft. These data form the basis for base value and forecast value determinations but must be adjusted to reflect the value of engine and gross weight options and other features of the aircraft. LIMITING CONDITIONS AND ASSUMPTIONS BK has neither inspected the Aircraft nor their maintenance records but relied upon information supplied by Delta Air Lines and from BK's own database. In determining the base value of an aircraft, the following assumptions apply to the aircraft: 1. Each aircraft has half-time remaining to its next major overhaul or scheduled shop visit on its airframe, engines, landing gear and auxiliary power unit. (Unless aircraft is a new delivery.) 2. The aircraft is in compliance under a Federal Aviation Administration approved airline maintenance program, with all airworthiness directives, mandatory modifications and applicable service bulletins currently up to industry standard. 3. The interior of the aircraft is in a standard configuration for its specific type, with the buyer furnished equipment and options of the types and models generally accepted and utilized in the industry. 4. The aircraft is in current flight operations. 5. The aircraft is sold for cash without seller financing. 6. The aircraft is in average or better condition. 7. There is no accident damage. CONCLUSIONS Our base value opinion stated herein is given after consideration of the significant event of terrorism that occurred within the United States on September 11, 2001. During the ensuing days since that event, we have begun to see how our industry has been adversely January 22, 2003 Page 3 affected. Passenger demand for air travel has dropped dramatically causing airlines to reduce flight schedules and ground significant quantities of their fleets. In response to this initial industry reaction, BK Associates has selectively reduced our opinion of aircraft current fair market values. Today, we are unsure of the long-term effect on aircraft values and will continue to review the industry status. Since our base values, as provided in this appraisal letter, are derived from historical value trends and are not immediately influenced by current supply and demand issues, we have not affected base values at this time. Based on the above methodology, considerations and assumptions, it is our opinion that the current base value of each aircraft as of today is as shown in Figure 1 attached hereto. BK Associates, Inc. has no present or contemplated future interest in the Aircraft, nor any interest that would preclude our making a fair and unbiased estimate. This appraisal represents the opinion of BK Associates, Inc. and reflects our best judgment based on the information available to us at the time of preparation and the time and budget constraints imposed by the client. It is not given as a recommendation, or as an inducement, for any financial transaction and further, BK Associates, Inc. assumes no responsibility or legal liability for any action taken or not taken by the addressee, or any other party, with regard to the appraised equipment. By accepting this appraisal, the addressee agrees that BK Associates, Inc. shall bear no such responsibility or legal liability. This appraisal is prepared for the use of the addressee and shall not be provided to other parties without the express consent of the addressee. Sincerely, BK ASSOCIATES, INC. (R. L. Britton Signature) R. L. Britton Vice President ISTAT Senior Certified Appraiser RLB/kf Attachment January 22, 2003 Page 4 DELTA AIR LINES INC. TWELVE AIRCRAFT PORTFOLIO JANUARY 2003
BASE ACFT SERIAL REG MFG. VALUE TYPE NUMBER NUMBER DATE ENGINE MTOW ($ MIL) - ---- ------ ------ ---- ------ ---- ------- 1 B737-800 30816 N3760C Dec-01 CFM56-7B26 157,200 40.65 2 B737-800 29628 N3761R Dec-01 CFM56-7B26 157,200 40.65 3 B767-300ER 28450 N193DN Aug-97 PW4060 407,000 68.65 4 B767-300ER 28451 N194DN Sep-97 PW4060 407,000 68.90 5 B767-300ER 28452 N195DN Sep-97 PW4060 407,000 68.90 6 B767-300ER 28453 N196DN Oct-97 PW4060 407,000 69.20 7 B767-300ER 28454 N197DN Dec-97 PW4060 407,000 69.70 8 B767-300ER 28455 N198DN Feb-98 PW4060 407,000 70.40 9 B767-300ER 30595 N1611B May-00 CF6-80C2B6F 407,000 77.55 10 B767-300ER 30575 N1612T May-01 CF6-80C2B6F 407,000 80.80 11 B767-300ER 32776 N1613B Aug-01 CF6-80C2B6F 407,000 81.55 12 B767-300ER 30596 N178DZ May-00 CF6-80C2B6F 407,000 77.55
Note the B737-800 aircraft are listed with CFM56-7B26 engines. However, BK Associates has been informed the engines installed are CFM56-7B26 engines purchased with an operating limit to CFM56-7B24 status. With this limit, BK Associates has valued the aircraft as though they are powered by the CFM56-7B24 engines. APPENDIX III EQUIPMENT NOTE PRINCIPAL PAYMENTS SERIES G EQUIPMENT NOTES
B737-832 B737-832 B767-332ER B767-332ER B767-332ER B767-332ER DATE N3760C N3761R N193DN N194DN N195DN N196DN - ---- -------------- -------------- -------------- -------------- -------------- -------------- April 25, 2003....... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 July 25, 2003........ 0.00 0.00 707,055.82 0.00 0.00 0.00 October 25, 2003..... 0.00 0.00 1,339,010.88 2,439,498.38 2,439,498.38 1,098,625.74 January 25, 2004..... 1,107,117.84 1,107,117.84 0.00 0.00 0.00 1,349,622.63 April 25, 2004....... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2004........ 0.00 0.00 1,040,999.31 0.00 0.00 0.00 October 25, 2004..... 0.00 0.00 1,290,022.67 2,341,098.45 2,341,098.45 1,049,249.30 January 25, 2005..... 1,881,880.19 1,881,880.19 0.00 0.00 0.00 1,300,246.20 April 25, 2005....... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2005........ 0.00 0.00 992,011.11 0.00 0.00 0.00 October 25, 2005..... 0.00 0.00 1,241,034.47 2,242,698.51 2,242,698.51 999,872.87 January 25, 2006..... 1,027,880.76 1,027,880.76 0.00 0.00 0.00 1,250,869.76 April 25, 2006....... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2006........ 0.00 0.00 943,022.90 0.00 0.00 0.00 October 25, 2006..... 0.00 0.00 1,192,046.27 2,144,298.58 2,144,298.58 950,496.43 January 25, 2007..... 1,749,818.43 1,749,818.43 0.00 0.00 0.00 1,201,493.32 April 25, 2007....... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2007........ 0.00 0.00 894,034.70 0.00 0.00 0.00 October 25, 2007..... 0.00 0.00 1,143,058.06 2,045,898.64 2,045,898.64 901,119.99 January 25, 2008..... 16,150,787.91 16,150,787.91 19,217,751.61 19,302,986.85 19,302,986.85 20,526,133.10 B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER DATE N197DN N198DN N1611B N178DZ N1612T N1613B - ---- -------------- -------------- -------------- -------------- -------------- -------------- April 25, 2003....... $ 0.00 $ 1,669,849.99 $1, 009,892.08 $ 1,009,892.08 $ 1,048,670.22 $ 0.00 July 25, 2003........ 0.00 0.00 1,477,572.84 1,477,572.84 518,234.11 875,164.07 October 25, 2003..... 0.00 0.00 0.00 0.00 0.00 805,201.53 January 25, 2004..... 2,463,181.70 1,115,902.20 0.00 0.00 0.00 0.00 April 25, 2004....... 0.00 1,370,846.15 1,213,995.47 1,213,995.47 1,313,089.85 0.00 July 25, 2004........ 0.00 0.00 734,237.81 734,237.81 2,320,217.02 1,323,442.94 October 25, 2004..... 0.00 0.00 0.00 0.00 0.00 2,338,510.82 January 25, 2005..... 2,363,826.47 1,065,749.29 0.00 0.00 0.00 0.00 April 25, 2005....... 0.00 1,320,693.24 1,188,964.64 1,188,964.64 1,236,599.18 0.00 July 25, 2005........ 0.00 0.00 2,127,620.93 2,127,620.93 747,908.78 1,246,349.17 October 25, 2005..... 0.00 0.00 0.00 0.00 0.00 753,805.69 January 25, 2006..... 2,264,471.24 1,015,596.38 0.00 0.00 0.00 0.00 April 25, 2006....... 0.00 1,270,540.33 1,113,872.13 1,113,872.13 1,211,102.29 0.00 July 25, 2006........ 0.00 0.00 1,368,352.28 1,368,352.28 2,167,235.67 1,220,651.25 October 25, 2006..... 0.00 0.00 0.00 0.00 0.00 2,184,323.29 January 25, 2007..... 2,165,116.01 965,443.48 0.00 0.00 0.00 0.00 April 25, 2007....... 0.00 1,220,387.43 1,063,810.46 1,063,810.46 1,134,611.62 0.00 July 25, 2007........ 0.00 0.00 1,318,290.61 1,318,290.61 1,393,830.00 1,143,557.49 October 25, 2007..... 0.00 0.00 0.00 0.00 0.00 1,404,819.69 January 25, 2008..... 21,561,000.45 21,772,070.51 26,195,384.93 26,195,384.93 29,118,887.55 29,352,418.32
III-1 APPENDIX III EQUIPMENT NOTE PRINCIPAL PAYMENTS SERIES C EQUIPMENT NOTES
B737-832 B737-832 B767-332ER B767-332ER B767-332ER B767-332ER DATE N3760C N3761R N193DN N194DN N195DN N196DN - ---- ------------- ------------- ------------- ------------- ------------- -------------- April 25, 2003........... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 July 25, 2003............ 0.00 0.00 0.00 0.00 0.00 0.00 October 25, 2003......... 0.00 0.00 0.00 0.00 0.00 0.00 January 25, 2004......... 0.00 0.00 0.00 0.00 0.00 0.00 April 25, 2004........... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2004............ 0.00 0.00 0.00 0.00 0.00 0.00 October 25, 2004......... 0.00 0.00 0.00 0.00 0.00 0.00 January 25, 2005......... 0.00 0.00 0.00 0.00 0.00 0.00 April 25, 2005........... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2005............ 0.00 0.00 0.00 0.00 0.00 0.00 October 25, 2005......... 0.00 0.00 0.00 0.00 0.00 0.00 January 25, 2006......... 0.00 0.00 0.00 0.00 0.00 0.00 April 25, 2006........... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2006............ 0.00 0.00 0.00 0.00 0.00 0.00 October 25, 2006......... 0.00 0.00 0.00 0.00 0.00 0.00 January 25, 2007......... 0.00 0.00 0.00 0.00 0.00 0.00 April 25, 2007........... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2007............ 0.00 0.00 0.00 0.00 0.00 0.00 October 25, 2007......... 0.00 0.00 0.00 0.00 0.00 0.00 January 25, 2008......... 8,325,376.09 8,325,376.09 9,858,854.66 9,901,472.19 9,901,472.19 10,513,044.00 B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER DATE N197DN N198DN N1611B N178DZ N1612T N1613B - ---- -------------- -------------- -------------- -------------- -------------- -------------- April 25, 2003........... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 July 25, 2003............ 0.00 0.00 0.00 0.00 0.00 0.00 October 25, 2003......... 0.00 0.00 0.00 0.00 0.00 0.00 January 25, 2004......... 0.00 0.00 0.00 0.00 0.00 0.00 April 25, 2004........... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2004............ 0.00 0.00 0.00 0.00 0.00 0.00 October 25, 2004......... 0.00 0.00 0.00 0.00 0.00 0.00 January 25, 2005......... 0.00 0.00 0.00 0.00 0.00 0.00 April 25, 2005........... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2005............ 0.00 0.00 0.00 0.00 0.00 0.00 October 25, 2005......... 0.00 0.00 0.00 0.00 0.00 0.00 January 25, 2006......... 0.00 0.00 0.00 0.00 0.00 0.00 April 25, 2006........... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2006............ 0.00 0.00 0.00 0.00 0.00 0.00 October 25, 2006......... 0.00 0.00 0.00 0.00 0.00 0.00 January 25, 2007......... 0.00 0.00 0.00 0.00 0.00 0.00 April 25, 2007........... 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2007............ 0.00 0.00 0.00 0.00 0.00 0.00 October 25, 2007......... 0.00 0.00 0.00 0.00 0.00 0.00 January 25, 2008......... 11,030,476.57 11,136,011.37 13,347,663.84 13,347,663.84 14,809,412.01 14,926,177.15
III-2 APPENDIX III EQUIPMENT NOTE PRINCIPAL PAYMENTS SERIES D EQUIPMENT NOTES
B737-832 B737-832 B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER DATE N3760C N3761R N193DN N194DN N195DN N196DN N197DN - ---- ----------- ----------- ----------- ------------- ------------- ----------- ------------- April 25, 2003.......... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 July 25, 2003........... 0.00 0.00 544,989.57 0.00 0.00 0.00 0.00 October 25, 2003........ 0.00 0.00 669,500.32 1,219,739.84 1,219,739.84 549,308.67 0.00 January 25, 2004........ 553,554.68 553,554.68 0.00 0.00 0.00 674,806.15 1,231,581.43 April 25, 2004.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2004........... 0.00 0.00 520,495.68 0.00 0.00 0.00 0.00 October 25, 2004........ 0.00 0.00 645,006.41 1,170,540.28 1,170,540.28 524,620.64 0.00 January 25, 2005........ 940,932.90 940,932.90 0.00 0.00 0.00 650,118.13 1,181,904.20 April 25, 2005.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2005........... 0.00 0.00 496,001.77 0.00 0.00 0.00 0.00 October 25, 2005........ 0.00 0.00 620,512.49 1,121,340.69 1,121,340.69 499,932.62 0.00 January 25, 2006........ 513,936.45 513,936.45 0.00 0.00 0.00 625,430.10 1,132,226.96 April 25, 2006.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2006........... 0.00 0.00 471,507.84 0.00 0.00 0.00 0.00 October 25, 2006........ 0.00 0.00 596,018.58 1,072,141.09 1,072,141.09 475,244.59 0.00 January 25, 2007........ 874,902.53 874,902.53 0.00 0.00 0.00 600,742.07 1,082,549.73 April 25, 2007.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00 July 25, 2007........... 0.00 0.00 447,013.93 0.00 0.00 0.00 0.00 October 25, 2007........ 0.00 0.00 571,524.66 1,022,941.50 1,022,941.50 450,556.54 0.00 January 25, 2008........ 17.87 17.87 21.14 21.24 21.24 22.55 23.65 B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER DATE N198DN N1611B N178DZ N1612T N1613B - ---- ------------- ------------- ------------- ------------- ------------- April 25, 2003.......... $1,065,741.14 $ 644,539.05 $ 644,539.05 $ 669,288.25 $ 0.00 July 25, 2003........... 0.00 1,138,894.26 1,138,894.26 399,448.23 674,565.27 October 25, 2003........ 0.00 0.00 0.00 0.00 402,597.69 January 25, 2004........ 557,946.83 0.00 0.00 0.00 0.00 April 25, 2004.......... 685,417.83 606,993.09 606,993.09 656,539.91 0.00 July 25, 2004........... 0.00 367,116.09 367,116.09 1,160,099.64 661,716.41 October 25, 2004........ 0.00 0.00 0.00 0.00 1,169,246.47 January 25, 2005........ 532,870.58 0.00 0.00 0.00 0.00 April 25, 2005.......... 660,341.57 594,477.77 594,477.77 618,294.86 0.00 July 25, 2005........... 0.00 1,063,802.34 1,063,802.34 373,951.53 623,169.82 October 25, 2005........ 0.00 0.00 0.00 0.00 376,899.97 January 25, 2006........ 507,794.31 0.00 0.00 0.00 0.00 April 25, 2006.......... 635,265.30 556,931.80 556,931.80 605,546.52 0.00 July 25, 2006........... 0.00 684,170.91 684,170.91 1,083,609.55 610,320.96 October 25, 2006........ 0.00 0.00 0.00 0.00 1,092,153.30 January 25, 2007........ 482,718.05 0.00 0.00 0.00 0.00 April 25, 2007.......... 610,189.05 531,901.16 531,901.16 567,301.47 0.00 July 25, 2007........... 0.00 659,140.27 659,140.27 696,909.67 571,774.37 October 25, 2007........ 0.00 0.00 0.00 0.00 702,404.48 January 25, 2008........ 23.89 28.63 28.63 31.77 32.01
III-3 APPENDIX IV LOAN TO VALUE RATIOS OF EQUIPMENT NOTES SERIES G EQUIPMENT NOTES
B737-832 B737-832 B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER DATE N3760C N3761R N193DN N194DN N195DN N196DN N197DN N198DN - ---- -------- -------- ---------- ---------- ---------- ---------- ---------- ---------- January 30, 2003.............. 53.5% 53.5% 44.8% 45.5% 45.5% 45.5% 45.5% 47.8% April 25, 2003................ 53.5 53.5 44.8 45.5 45.5 45.5 45.5 45.3 July 25, 2003................. 53.5 53.5 45.4 45.5 45.5 45.5 45.5 45.3 October 25, 2003.............. 53.5 53.5 43.3 43.3 43.3 45.5 45.5 45.3 January 25, 2004.............. 52.4 52.4 43.3 43.3 43.3 43.4 43.4 45.3 April 25, 2004................ 52.4 52.4 43.3 43.3 43.3 43.4 43.4 43.2 July 25, 2004................. 52.4 52.4 43.3 43.3 43.3 43.4 43.4 43.2 October 25, 2004.............. 52.4 52.4 41.2 41.2 41.2 43.4 43.4 43.2 January 25, 2005.............. 49.3 49.3 41.2 41.2 41.2 41.3 41.3 43.2 April 25, 2005................ 49.3 49.3 41.2 41.2 41.2 41.3 41.3 41.1 July 25, 2005................. 49.3 49.3 41.2 41.2 41.2 41.3 41.3 41.1 October 25, 2005.............. 49.3 49.3 39.1 39.1 39.1 41.2 41.3 41.1 January 25, 2006.............. 48.2 48.2 39.1 39.1 39.1 39.2 39.2 41.1 April 25, 2006................ 48.2 48.2 39.1 39.1 39.1 39.2 39.2 39.0 July 25, 2006................. 48.2 48.2 39.1 39.1 39.1 39.2 39.2 39.0 October 25, 2006.............. 48.2 48.2 37.0 37.0 37.0 39.1 39.2 39.0 January 25, 2007.............. 45.0 45.0 37.0 37.0 37.0 37.1 37.1 39.0 April 25, 2007................ 45.0 45.0 37.0 37.0 37.0 37.1 37.1 36.9 July 25, 2007................. 45.0 45.0 36.9 37.0 37.0 37.1 37.1 36.9 October 25, 2007.............. 45.0 45.0 34.9 34.9 34.9 37.0 37.1 36.9 January 25, 2008.............. NA NA NA NA NA NA NA NA B767-332ER B767-332ER B767-332ER B767-332ER DATE N1611B N178DZ N1612T N1613B - ---- ---------- ---------- ---------- ---------- January 30, 2003.............. 50.9% 50.9% 52.8% 53.0% April 25, 2003................ 51.2 51.2 53.2 53.0 July 25, 2003................. 49.2 49.2 52.5 53.6 October 25, 2003.............. 49.2 49.2 52.5 52.5 January 25, 2004.............. 49.2 49.2 52.5 52.5 April 25, 2004................ 49.2 49.2 52.5 52.5 July 25, 2004................. 48.2 48.2 49.4 52.5 October 25, 2004.............. 48.2 48.2 49.4 49.4 January 25, 2005.............. 48.2 48.2 49.4 49.4 April 25, 2005................ 48.2 48.2 49.4 49.4 July 25, 2005................. 45.1 45.1 48.3 49.4 October 25, 2005.............. 45.1 45.1 48.3 48.3 January 25, 2006.............. 45.1 45.1 48.3 48.3 April 25, 2006................ 45.0 45.0 48.3 48.3 July 25, 2006................. 43.0 43.0 45.2 48.3 October 25, 2006.............. 43.0 43.0 45.2 45.2 January 25, 2007.............. 43.0 43.0 45.2 45.2 April 25, 2007................ 43.0 43.0 45.2 45.2 July 25, 2007................. 40.9 40.9 43.1 45.2 October 25, 2007.............. 40.9 40.9 43.1 43.1 January 25, 2008.............. NA NA NA NA
IV-1 APPENDIX IV LOAN TO VALUE RATIOS OF EQUIPMENT NOTES SERIES C EQUIPMENT NOTES
B737-832 B737-832 B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER DATE N3760C N3761R N193DN N194DN N195DN N196DN N197DN N198DN - ---- -------- -------- ---------- ---------- ---------- ---------- ---------- ---------- January 30, 2003............. 73.9% 73.9% 59.6% 60.2% 60.2% 61.1% 61.8% 64.0% April 25, 2003............... 73.9 73.9 59.6 60.2 60.2 61.1 61.8 61.6 July 25, 2003................ 73.9 73.9 60.6 60.2 60.2 61.1 61.8 61.6 October 25, 2003............. 73.9 73.9 58.6 58.6 58.6 61.6 61.8 61.6 January 25, 2004............. 73.4 73.4 58.6 58.6 58.6 59.6 60.3 62.1 April 25, 2004............... 73.4 73.4 58.6 58.6 58.6 59.6 60.3 60.1 July 25, 2004................ 73.4 73.4 59.1 58.6 58.6 59.6 60.3 60.1 October 25, 2004............. 73.4 73.4 57.0 57.1 57.1 60.2 60.3 60.1 January 25, 2005............. 70.9 70.9 57.0 57.1 57.1 58.1 58.8 60.7 April 25, 2005............... 70.9 70.9 57.0 57.1 57.1 58.1 58.8 58.6 July 25, 2005................ 70.9 70.9 57.6 57.1 57.1 58.1 58.8 58.6 October 25, 2005............. 70.9 70.9 55.6 55.6 55.6 58.7 58.8 58.6 January 25, 2006............. 70.6 70.6 55.6 55.6 55.6 56.6 57.4 59.3 April 25, 2006............... 70.6 70.6 55.6 55.6 55.6 56.6 57.4 57.2 July 25, 2006................ 70.6 70.6 56.2 55.6 55.6 56.6 57.4 57.2 October 25, 2006............. 70.6 70.6 54.1 54.2 54.2 57.3 57.4 57.2 January 25, 2007............. 68.2 68.2 54.1 54.2 54.2 55.2 56.1 57.9 April 25, 2007............... 68.2 68.2 54.1 54.2 54.2 55.2 56.1 55.8 July 25, 2007................ 68.2 68.2 54.8 54.2 54.2 55.2 56.1 55.8 October 25, 2007............. 68.2 68.2 52.8 52.8 52.8 56.0 56.1 55.8 January 25, 2008............. NA NA NA NA NA NA NA NA B767-332ER B767-332ER B767-332ER B767-332ER DATE N1611B N178DZ N1612T N1613B - ---- ---------- ---------- ---------- ---------- January 30, 2003............. 68.4% 68.4% 71.4% 71.5% April 25, 2003............... 69.3 69.3 72. 3 71.5 July 25, 2003................ 67.3 67.3 71.6 72.7 October 25, 2003............. 67.3 67.3 71.6 71.7 January 25, 2004............. 67.3 67.3 71.6 71.7 April 25, 2004............... 67.9 67.9 72.2 71.7 July 25, 2004................ 66.9 66.9 69.1 72.3 October 25, 2004............. 66.9 66.9 69.1 69.2 January 25, 2005............. 66.9 66.9 69.1 69.2 April 25, 2005............... 67.5 67.5 69.8 69.2 July 25, 2005................ 64.4 64.4 68.8 69.8 October 25, 2005............. 64.4 64.4 68.8 68.8 January 25, 2006............. 64.4 64.4 68.8 68.8 April 25, 2006............... 65.1 65.1 69.4 68.8 July 25, 2006................ 63.1 63.1 66.4 69.5 October 25, 2006............. 63.1 63.1 66.4 66.4 January 25, 2007............. 63.1 63.1 66.4 66.4 April 25, 2007............... 63.8 63.8 67.1 66.4 July 25, 2007................ 61.7 61.7 65.0 67.1 October 25, 2007............. 61.7 61.7 65.0 65.1 January 25, 2008............. NA NA NA NA
IV-2 APPENDIX IV LOAN TO VALUE RATIOS OF EQUIPMENT NOTES SERIES D EQUIPMENT NOTE
B737-832 B737-832 B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER B767-332ER DATE N3760C N3761R N193DN N194DN N195DN N196DN N197DN N198DN - ---- -------- -------- ---------- ---------- ---------- ---------- ---------- ---------- January 30, 2003.............. 80.9% 80.9% 67.9% 68.6% 68.6% 68.6% 68.7% 72.4% April 25, 2003................ 80.9 80.9 67.9 68.6 68.6 68.6 68.7 68.4 July 25, 2003................. 80.9 80.9 68.4 68.6 68.6 68.6 68.7 68.4 October 25, 2003.............. 80.9 80.9 65.3 65.4 65.4 68.6 68.7 68.4 January 25, 2004.............. 79.3 79.3 65.3 65.4 65.4 65.5 65.5 68.3 April 25, 2004................ 79.3 79.3 65.3 65.4 65.4 65.5 65.5 65.2 July 25, 2004................. 79.3 79.3 65.3 65.4 65.4 65.5 65.5 65.2 October 25, 2004.............. 79.3 79.3 62.2 62.3 62.3 65.4 65.5 65.2 January 25, 2005.............. 74.6 74.6 62.2 62.3 62.3 62.3 62.4 65.2 April 25, 2005................ 74.6 74.6 62.2 62.3 62.3 62.3 62.4 62.1 July 25, 2005................. 74.6 74.6 62.2 62.3 62.3 62.3 62.4 62.1 October 25, 2005.............. 74.6 74.6 59.0 59.1 59.1 62.3 62.4 62.1 January 25, 2006.............. 72.9 72.9 59.0 59.1 59.1 59.2 59.2 62.1 April 25, 2006................ 72.9 72.9 59.0 59.1 59.1 59.2 59.2 59.0 July 25, 2006................. 72.9 72.9 59.0 59.1 59.1 59.2 59.2 59.0 October 25, 2006.............. 72.9 72.9 55.9 56.0 56.0 59.1 59.2 59.0 January 25, 2007.............. 68.2 68.2 55.9 56.0 56.0 56.0 56.1 58.9 April 25, 2007................ 68.2 68.2 55.9 56.0 56.0 56.0 56.1 55.8 July 25, 2007................. 68.2 68.2 55.9 56.0 56.0 56.0 56.1 55.8 October 25, 2007.............. 68.2 68.2 52.8 52.8 52.8 56.0 56.1 55.8 January 25, 2008.............. NA NA NA NA NA NA NA NA B767-332ER B767-332ER B767-332ER B767-332ER DATE N1611B N178DZ N1612T N1613B - ---- ---------- ---------- ---------- ---------- January 30, 2003.............. 77.4% 77.4% 79.9% 80.1% April 25, 2003................ 77.7 77.7 80.2 80.1 July 25, 2003................. 74.2 74.2 79.1 80.7 October 25, 2003.............. 74.2 74.2 79.1 79.1 January 25, 2004.............. 74.2 74.2 79.1 79.1 April 25, 2004................ 74.2 74.2 79.0 79.1 July 25, 2004................. 72.6 72.6 74.4 79.1 October 25, 2004.............. 72.6 72.6 74.4 74.4 January 25, 2005.............. 72.6 72.6 74.4 74.4 April 25, 2005................ 72.6 72.6 74.4 74.4 July 25, 2005................. 68.0 68.0 72.8 74.4 October 25, 2005.............. 68.0 68.0 72.8 72.9 January 25, 2006.............. 68.0 68.0 72.8 72.9 April 25, 2006................ 67.9 67.9 72.8 72.9 July 25, 2006................. 64.9 64.9 68.2 72.8 October 25, 2006.............. 64.9 64.9 68.2 68.2 January 25, 2007.............. 64.9 64.9 68.2 68.2 April 25, 2007................ 64.8 64.8 68.1 68.2 July 25, 2007................. 61.7 61.7 65.0 68.2 October 25, 2007.............. 61.7 61.7 65.0 65.1 January 25, 2008.............. NA NA NA NA
IV-3 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 102 of the Delaware General Corporation Law ("DGCL") allows a corporation to eliminate the personal liability of directors of a corporation to the corporation or to any of its stockholders for monetary damages for a breach of fiduciary duty as a director, except (i) for breach of the director's duty of loyalty, (ii) for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for certain unlawful dividends and stock repurchases or (iv) for any transaction from which the director derived an improper personal benefit. Article Eighteenth of the Certificate of Incorporation of Delta (the "Certificate") provided that no director shall be personally liable to Delta or its stockholders for monetary damages for any breach of his fiduciary duty as a director, except as provided in Section 102 of the DGCL. Section 145 of the DGCL provides that in the case of any action other than one by or in the right of the corporation, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation in such capacity on behalf of another corporation or enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Section 145 of the DGCL provides that in the case of an action by or in the right of a corporation to procure a judgment in its favor, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any action or suit by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation in such capacity on behalf of another corporation or enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted under standards similar to those set forth in the preceding paragraph, except that no indemnification may be made in respect of any action or claim as to which such person shall have been adjudged to be liable to the corporation unless a court determines that such person is fairly and reasonably entitled to indemnification. Article Tenth of the Certificate provides that Delta shall to the extent permitted be law indemnify any person for all liabilities incurred by or imposed upon him as a result of any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, in which he shall be involved by reason of the fact that he is or was serving as a director, officer or employee of Delta, or that, at the request of Delta, he is or was serving another corporation or enterprise in any capacity. Delta has purchased and maintains at its expense on behalf of directors and officers insurance, within certain limits, covering liabilities that may be incurred by them in such capacities. ITEM 21. LIST OF EXHIBITS
EXHIBIT REFERENCE NUMBER DOCUMENT DESCRIPTION - --------- -------------------- 4.1 Pass Through Trust Agreement, dated as of November 16, 2000, between Delta Air Lines, Inc. ("Delta") and U.S. Bank National Association (as successor to State Street Bank and Trust Company of Connecticut, National Association) (the "Pass-Through Trustee") 4.2 Trust Supplement No. 2003-1G, dated as of January 30, 2003, between Delta and the Pass Through Trustee 4.3 Form of Exchange Pass Through Certificate, Series 2003-1G (included in Exhibit 4.2)
II-1
EXHIBIT REFERENCE NUMBER DOCUMENT DESCRIPTION - --------- -------------------- 4.4 Intercreditor Agreement, dated as of January 30, 2003, among the Pass Through Trustee, Landesbank Baden-Wurttemberg (the "Primary Liquidity Provider"), Merrill Lynch Capital Services, Inc. (the "Above-Cap Liquidity Provider"), U.S. Trust Bank National Association (the "Subordination Agent") and Ambac Assurance Corporation (the "Policy Provider") 4.5 Revolving Credit Agreement (2003-1G), dated as of January 30, 2003, between the Subordination Agent and the Primary Liquidity Provider 4.6 Above-Cap Liquidity Facility, dated as of January 30, 2003, between the Subordination Agent and the Above-Cap Liquidity Provider 4.7 Registration Rights Agreement, dated January 30, 2003, among Delta, the Pass Through Trustee, Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Lyonnais Securities (USA) Inc., Deutsche Bank Securities Inc., ING Financial Markets LLC, J.P. Morgan Securities Inc., Salomon Smith Barney Inc. and U.S. Bancorp Piper Jaffray Inc. 4.8 Participation Agreement (N3760C) dated as of January 30, 2003, by and among Delta, the Pass Through Trustee, the Subordination Agent, U.S. Bank Trust National Association, as loan trustee (the "Loan Trustee"), and U.S. Bank Trust National Association, in its individual capacity as set forth therein 4.9 Indenture and Security Agreement (N3760C) dated as of January 30, 2003, by and between Delta and the Loan Trustee 4.10 Form of Series 2003-1 Equipment Notes issued in connection with the Boeing aircraft bearing U.S. registration number N3760C (included in Exhibit 4.9) 4.11 Participation Agreement (N195DN) dated as of January 30, 2003, by and among Delta, the Pass Through Trustee the Subordination Agent, the Loan Trustee, and U.S. Bank Trust National Association, in its individual capacity as set forth therein 4.12 Indenture and Security Agreement (N195DN) dated as of January 30, 2003 by and between Delta and the Loan Trustee 4.13 Form of Series 2003-1 Equipment Notes issued in connection with the Boeing aircraft bearing U.S. registration number (N195DN) (included in Exhibit 4.12) 5.1 Opinion of Cadwalader, Wickersham & Taft LLP 15.1 Letter from Deloitte & Touche LLP regarding unaudited interim financial information 23.1 Consent of Deloitte & Touche LLP 23.2 Consent of KPMG LLP 23.3 Consent of Cadwalader, Wickersham & Taft LLP (included in Exhibit 5.1) 23.4 Consent of Aircraft Information Systems, Inc. 23.5 Consent of AvSolutions, Inc. 23.6 Consent of BK Associates, Inc. 24.1 Powers of Attorney 25.1 Statement of Eligibility of U.S. Bank Trust National Association for the 2003-1G Pass Through Certificates on Form T-1 99.1 Form of Letter of Transmittal 99.2 Form of Notice of Guaranteed Delivery 99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees 99.4 Form of Letter to Clients 99.5 Schedule I
Pursuant to Instruction 2 to Item 601 of Regulation S-K, Exhibit 99.5 filed herewith contains (a) a list of other documents applicable to the Boeing aircraft that relate to the offering of Delta's Pass Through Certificates, Series 2003-1, which documents are substantially identical to those applicable to the II-2 Boeing 737 and 767 aircraft bearing United States registration number N376OC and (b) a list of other documents applicable to the Boeing aircraft that relate to the offering of Delta's Pass Through Certificates, Series 2003-1, which documents are substantially identical to those applicable to the Boeing 767 aircraft bearing United States registration number N195DN. Exhibit 99.5 sets forth the details by which such other documents differ from the corresponding documents filed in respect of the aircraft bearing United States registrations number N3760C and N195DN, respectively. ITEM 22. UNDERTAKINGS The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 ("Securities Act"); (ii) To reflect in the prospectus any facts or events or arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if the change in volume represents no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of such registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (c) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other II-3 equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (d) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-4, and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, and State of Georgia, on the 10th day of July, 2003. DELTA AIR LINES, INC. By: /s/ M. MICHELE BURNS ------------------------------------ M. Michele Burns Executive Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by or on behalf of the following persons in the capacities indicated on the 10th day of July, 2003.
SIGNATURE TITLE --------- ----- /s/ LEO F. MULLIN Chairman of the Board and Chief Executive Officer ------------------------------------------------ (Principal Executive Officer) Leo F. Mullin * Director ------------------------------------------------ Edward H. Budd * Director ------------------------------------------------ George M. C. Fisher * Director ------------------------------------------------ David R. Goode * Director ------------------------------------------------ Gerald Grinstein * Director ------------------------------------------------ James M. Kilts * Director ------------------------------------------------ John F. Smith, Jr. * Director ------------------------------------------------ Joan E. Spero
II-5
SIGNATURE TITLE --------- ----- * Director ------------------------------------------------ Andrew J. Young *By: /s/ M. MICHELE BURNS Attorney-in-Fact ----------------------------------------- M. Michele Burns
II-6 EX-4.1 3 g83137exv4w1.txt PASS THROUGH TRUST AGREEMENT EXHIBIT 4.1 PASS THROUGH TRUST AGREEMENT Dated as of November 16, 2000 between DELTA AIR LINES, INC. and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Trustee TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS Section 1.01. Definitions.................................................................................... 2 Section 1.02. Compliance Certificates and Opinions........................................................... 11 Section 1.03. Form of Documents Delivered to Trustee......................................................... 12 Section 1.04. Directions of Certificate Holders.............................................................. 12 ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF TRUST PROPERTY Section 2.01. Amount Unlimited; Issuable in Series........................................................... 13 Section 2.02. Acquisition of Equipment Notes................................................................. 16 Section 2.03. Acceptance by Trustee.......................................................................... 18 Section 2.04. Limitation of Powers........................................................................... 18 ARTICLE III THE CERTIFICATES Section 3.01. Form, Denomination and Execution of Certificates............................................... 18 Section 3.02. Authentication of Certificates................................................................. 19 Section 3.03. Temporary Certificates......................................................................... 19 Section 3.04. Transfer and Exchange.......................................................................... 20 Section 3.05. Book-Entry and Definitive Certificates......................................................... 20 Section 3.06. Mutilated, Destroyed, Lost or Stolen Certificates.............................................. 22 Section 3.07. Persons Deemed Owners.......................................................................... 23 Section 3.08. Cancellation................................................................................... 23 Section 3.09. Limitation of Liability for Payments........................................................... 23 Section 3.10. CUSIP Numbers.................................................................................. 24 ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. Certificate Account and Special Payments Account............................................... 24 Section 4.02. Distributions from Certificate Account and Special Payments Account............................ 25 Section 4.03. Statements to Certificateholders............................................................... 26 Section 4.04. Investment of Special Payment Moneys........................................................... 27 ARTICLE V THE COMPANY Section 5.01. Maintenance of Corporate Existence............................................................. 28 Section 5.02. Consolidation, Merger, Etc..................................................................... 28
i ARTICLE VI DEFAULT Section 6.01. Indenture Events of Default and Triggering Events.............................................. 28 Section 6.02. Incidents of Sale of Equipment Notes........................................................... 30 Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit............................. 31 Section 6.04. Control by Certificateholders.................................................................. 31 Section 6.05. Waiver of Past Defaults........................................................................ 32 Section 6.06. Right of Certificateholders to Receive Payments Not to Be Impaired............................. 33 Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions.......................... 33 Section 6.08. Remedies Cumulative............................................................................ 33 Section 6.09. Discontinuance of Proceedings.................................................................. 34 Section 6.10. Undertaking for Costs.......................................................................... 34 ARTICLE VII THE TRUSTEE Section 7.01. Certain Duties and Responsibilities............................................................ 34 Section 7.02. Notice of Defaults............................................................................. 35 Section 7.03. Certain Rights of Trustee...................................................................... 35 Section 7.04. Not Responsible for Recitals or Issuance of Certificates....................................... 37 Section 7.05. May Hold Certificates.......................................................................... 37 Section 7.06. Money Held in Trust............................................................................ 37 Section 7.07. Compensation and Reimbursement................................................................. 37 Section 7.08. Corporate Trustee Required; Eligibility........................................................ 38 Section 7.09. Resignation and Removal; Appointment of Successor.............................................. 39 Section 7.10. Acceptance of Appointment by Successor......................................................... 41 Section 7.11. Merger, Conversion, Consolidation or Succession to Business.................................... 41 Section 7.12. Maintenance of Agencies........................................................................ 42 Section 7.13. Money for Certificate Payments to Be Held in Trust............................................. 43 Section 7.14. Registration of Equipment Notes in Trustee's Name.............................................. 43 Section 7.15. Representations and Warranties of Trustee...................................................... 43 Section 7.16. Withholding Taxes; Information Reporting....................................................... 45 Section 7.17. Trustee's Liens................................................................................ 45 Section 7.18. Preferential Collection of Claims.............................................................. 45 Section 7.19. Capacity in Which Acting....................................................................... 45 ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders.................. 45 Section 8.02. Preservation of Information; Communications to Certificateholders.............................. 46 Section 8.03. Reports by Trustee............................................................................. 46 Section 8.04. Reports by the Company......................................................................... 46 ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. Supplemental Agreements Without Consent of Certificateholders.................................. 47 Section 9.02. Supplemental Agreements with Consent of Certificateholders..................................... 49 Section 9.03. Documents Affecting Immunity or Indemnity...................................................... 50
ii Section 9.04. Execution of Supplemental Agreements........................................................... 50 Section 9.05. Effect of Supplemental Agreements.............................................................. 50 Section 9.06. Conformity with Trust Indenture Act............................................................ 50 Section 9.07. Reference in Certificates to Supplemental Agreements........................................... 50 ARTICLE X AMENDMENTS TO INDENTURES AND OTHER NOTE DOCUMENTS Section 10.01. Amendments and Supplements to Indentures and Other Note Documents.............................. 50 ARTICLE XI TERMINATION OF TRUSTS Section 11.01. Termination of the Trusts...................................................................... 51 ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. Limitation on Rights of Certificateholders..................................................... 52 Section 12.02. Certificates Nonassessable and Fully Paid...................................................... 53 Section 12.03. Registration of Equipment Notes in Name of Subordination Agent................................. 53 Section 12.04. Notices........................................................................................ 53 Section 12.05. Governing Law.................................................................................. 55 Section 12.06. Severability of Provisions..................................................................... 55 Section 12.07. Trust Indenture Act Controls................................................................... 55 Section 12.08. Effect of Headings and Table of Contents....................................................... 55 Section 12.09. Successors and Assigns......................................................................... 55 Section 12.10. Benefits of Agreement.......................................................................... 55 Section 12.11. Legal Holidays................................................................................. 55 Section 12.12. Counterparts................................................................................... 56 Section 12.13. Communication by Certificateholders with Other Certificateholders.............................. 56 Section 12.14. Normal Commercial Relations.................................................................... 56 Section 12.15. No Recourse Against Others..................................................................... 56 EXHIBIT A - Form of Certificate................................................................................. A-1
iii Reconciliation and tie between Delta Air Lines Pass Through Trust Agreement, dated as of November 16, 2000 and the Trust Indenture Act of 1939. This reconciliation does not constitute part of the Pass Through Trust Agreement.
Trust Indenture Act of 1939 Section Pass Through Trust Agreement Section - ----------------------------------- ------------------------------------ 310(a)(1) 7.08 (a)(2) 7.08 312(a) 7.12; 8.01; 8.02 313(a) 8.03 313(b) 8.03 314(a)(1)-(3) 8.04(a)-(c) (a)(4) 8.04(d) (c)(1) 1.02 (c)(2) 1.02 (d)(1) 1.02; 7.13; 11.01 (d)(2) 1.02; 7.13; 11.01 (d)(3) 1.02; 2.01 (e) 1.02 315(b) 7.02 315(c) 7.01(b) 316(a)(last sentence) 1.04(c) (a)(1)(A) 6.04 (a)(1)(B) 6.05 (b) 6.06 (c) 1.04(d) 317(a)(1) 6.03 (b) 7.13 318(a) 12.07
iv PASS THROUGH TRUST AGREEMENT This PASS THROUGH TRUST AGREEMENT, dated as of November 16, 2000 (the "Basic Agreement"), between Delta Air Lines, Inc., a Delaware corporation, and State Street Bank and Trust Company of Connecticut, National Association, a national banking association, as Trustee, is made with respect to the formation from time to time of separate Delta Air Lines Pass Through Trusts, and the issuance from time to time of separate series of Pass Through Certificates representing fractional undivided interests in the respective Trusts. W I T N E S S E T H: WHEREAS, this Basic Agreement amends and restates the form of pass through trust agreement filed as an exhibit to the Company's Registration Statement on Form S-3 (Registration No. 333-58647); WHEREAS, from time to time, the Company and the Trustee may enter into a Trust Supplement (this and certain other defined terms used herein are defined in Section 1.01) pursuant to which the Trustee shall declare the creation of a separate Trust for the benefit of the Holders of the series of Certificates to be issued in respect of such Trust, and the initial Holders of the Certificates of such series, as the grantors of such Trust, by their respective acceptances of the Certificates of such series, shall join in the creation of such Trust with the Trustee; WHEREAS, all Certificates to be issued in respect of each separate Trust will be issued as a separate series pursuant to this Agreement, will evidence fractional undivided interests in such Trust and will have no rights, benefits or interests in respect of any other separate Trust or the property held therein, subject, however, to the provisions of any Intercreditor Agreement to which one or more Trusts may be a party and to any provisions to the contrary in any applicable Trust Supplement; WHEREAS, from time to time, pursuant to the terms and conditions of this Agreement with respect to each separate Trust formed hereunder, the Trustee on behalf of such Trust shall purchase one or more issues of Equipment Notes having the identical interest rate as, and final maturity dates not later than the final Regular Distribution Date of, the series of Certificates issued in respect of such Trust and, subject to the terms of any related Intercreditor Agreement and to any terms to the contrary in any applicable Trust Supplement, shall hold such Equipment Notes in trust for the benefit of the Certificateholders of such Trust; WHEREAS, to facilitate the sale of Equipment Notes to, and the purchase of Equipment Notes by, the Trustee on behalf of each Trust created from time to time pursuant to this Agreement, the Company as the "issuer", as such term is defined in and solely for purposes of the Securities Act of 1933, as amended, of the Certificates to be issued in respect of each Trust and as the "obligor", as such term is defined in and solely for purposes of the Trust Indenture Act of 1939, as amended to date, has duly authorized the execution and delivery of this Basic Agreement and is undertaking to perform certain administrative and ministerial duties hereunder and is also undertaking to pay the fees and expenses of the Trustee; and WHEREAS, this Agreement, as supplemented from time to time, is subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions; NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. For all purposes of this Basic Agreement, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms used herein that are defined in this Article I have the meanings assigned to them in this Article I, and include the plural as well as the singular; (2) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, or by the rules promulgated under the Trust Indenture Act, have the meanings assigned to them therein; (3) all references in this Basic Agreement to designated "Articles", "Sections", "Subsections" and other subdivisions are to the designated Articles, Sections, Subsections and other subdivisions of this Basic Agreement; (4) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Basic Agreement as a whole and not to any particular Article, Section, Subsection or other subdivision; (5) unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation"; and (6) the term "this Agreement" (as distinguished from "this Basic Agreement") refers, unless the context otherwise requires, to this Basic Agreement as supplemented by the Trust Supplement creating a particular Trust and establishing the series of Certificates issued or to be issued in respect thereof, with reference to such Trust and such series of Certificates, as this Basic Agreement as so supplemented may be further supplemented with respect to such Trust and such series of Certificates. Act: has the meaning, with respect to any Certificateholder, specified in Section 1.04(a). Affiliate: means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such 2 Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power, directly or indirectly, to direct the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Aircraft: means one or more aircraft, including engines therefor, owned by or leased to the Company and securing one or more Equipment Notes. Authorized Agent: means, with respect to the Certificates of any series, any Paying Agent or Registrar for the Certificates of such series. Basic Agreement: means this Pass Through Trust Agreement, as the same may from time to time be supplemented, amended or modified, but does not include any Trust Supplement. Book-Entry Certificates: means, with respect to the Certificates of any series, a beneficial interest in the Certificates of such series, ownership and transfers of which shall be made through book entries as described in Section 3.05. Business Day: means, with respect to the Certificates of any series, any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in New York, New York, Atlanta, Georgia, or, so long as any Certificate of such series is outstanding, the city and state in which the Trustee or any related Loan Trustee maintains its Corporate Trust Office or receives and disburses funds. Certificate: means any one of the certificates executed and authenticated by the Trustee, substantially in the form of Exhibit A hereto. Certificate Account: means, with respect to the Certificates of any series, the account or accounts created and maintained for such series pursuant to Section 4.01(a) and the related Trust Supplement. Certificateholder or Holder: means, with respect to the Certificates of any series, the Person in whose name a Certificate of such series is registered in the Register for Certificates of such series. Certificate Owner: means, for purposes of Section 3.05, with respect to the Certificates of any series, a Person who owns a Book-Entry Certificate of such series. Clearing Agency: means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. Clearing Agency Participant: means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects, directly or indirectly, book-entry transfers and pledges of securities deposited with the Clearing Agency. Company: means Delta Air Lines, Inc., a Delaware corporation, or its successor in interest pursuant to Section 5.02. 3 Controlling Party: means, with respect to the Certificates of any series, the Person entitled to act as such pursuant to the terms of the related Intercreditor Agreement. Corporate Trust Office: means, with respect to the Trustee or any Loan Trustee, the office of such trustee in the city at which at any particular time its corporate trust business shall be principally administered. Cut-off Date: means, with respect to the Certificates of any series, the date designated as such in the Trust Supplement establishing such series. Definitive Certificates: has the meaning, with respect to the Certificates of any series, specified in Section 3.05. Direction: has the meaning specified in Section 1.04(a). Distribution Date: means any Regular Distribution Date, Special Distribution Date or Initial Regular Distribution Date. Equipment Note: means, with respect to any Trust, any one of the notes, certificates or instruments issued pursuant to any Indenture and described as "Equipment Notes" in, or on a schedule attached to, the Trust Supplement in respect of such Trust and to be held by the Trustee as part of such Trust, including any Equipment Note (as so defined) issued under the applicable Indenture in replacement thereof or substitution therefor. ERISA: means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor federal statute. Escrow Account: has the meaning, with respect to any Trust, specified in Section 2.02(b). Escrowed Funds: has the meaning, with respect to any Trust, specified in Section 2.02(b). Event of Default: means, in respect of any Trust, an Indenture Event of Default under any Indenture pursuant to which Equipment Notes held by such Trust were issued and such other event designated under the related Trust Supplement as an "Event of Default". Fractional Undivided Interest: means the fractional undivided interest in a Trust that is evidenced by a Certificate relating to such Trust. Holder: has the meaning specified in the definition of "Certificateholder or Holder". Indenture: means, with respect to any Trust, each of the one or more separate trust indenture and security agreements or trust indenture and mortgages or similar documents described in, or on a schedule attached to, the Trust Supplement and an indenture or other similar document having substantially the same terms and conditions which relates to a Substitute 4 Aircraft, as each such indenture is amended or supplemented in accordance with its respective terms; and "Indentures" means all of such agreements. Indenture Event of Default: means, with respect to any Indenture, any Event of Default (as such term is defined in such Indenture). Initial Regular Distribution Date: means, with respect to the Certificates of any series, the first Regular Distribution Date on which a Scheduled Payment is to be made. Intercreditor Agreement: means (a) any agreement by and among the Trustee, as trustee with respect to one or more Trusts, one or more Liquidity Providers, if applicable, and a Subordination Agent providing, among other things, for the distribution of payments made in respect of Equipment Notes held by such Trusts, or (b) such other agreement or agreements designated as an "Intercreditor Agreement" in the Trust Supplement relating to any Trust. Issuance Date: means, with respect to the Certificates of any series, the date of the issuance of such Certificates. Lease: means any lease between an Owner Trustee, as the lessor (or such other Person acting as the lessor), and the Company, as the lessee, referred to in the related Indenture, as such lease may be amended, supplemented or otherwise modified in accordance with its terms; and "Leases" means all such Leases. Letter of Representations: means, with respect to the Certificates of any series, an agreement among the Company, the Trustee and the initial Clearing Agency substantially in the form attached as an Exhibit to the related Trust Supplement, as such letter may be modified or supplemented, or any successor letter thereto. Liquidity Facility: means, with respect to the Certificates of any series or any Equipment Notes, (a) any revolving credit agreement, letter of credit, insurance policy, surety bond or financial guaranty or similar facility for the provision of liquidity support relating to the Certificates of such series between a Liquidity Provider and a Subordination Agent or one or more other Persons, as amended, replaced, supplemented or otherwise modified from time to time in accordance with its terms and, if applicable, the terms of any Intercreditor Agreement, or (b) such other agreement or agreements designated as a "Liquidity Facility" in the Trust Supplement relating to any Trust. Liquidity Provider: means, with respect to the Certificates of any series, a bank, insurance company, financial institution or other Person that agrees to provide a Liquidity Facility for the benefit of the holders of Certificates of such series. Loan Trustee: means, with respect to any Equipment Note or the Indenture applicable thereto, the bank, trust company or other financial institution designated as loan or indenture trustee under such Indenture, and any successor to such Loan Trustee as such trustee; and "Loan Trustees" means all of the Loan Trustees under the Indentures. 5 Note Documents: means, with respect to the Certificates of any series, the Equipment Notes with respect to such Certificates and, with respect to such Equipment Notes, the related Indenture, Participation Agreement, and, if the related Aircraft is leased to the Company, the related Lease and the related Purchase Agreement Assignment (as defined in the related Lease), if any. Officer's Certificate: means a certificate signed in the case of the Company, the Trustee, an Owner Trustee or a Loan Trustee, a Responsible Officer of the Company, the Trustee or such Owner Trustee or such Loan Trustee, as the case may be. Opinion of Counsel: means a written opinion of legal counsel who: (a) in the case of counsel for the Company may be either a senior attorney of the Company one of whose principal duties is furnishing advice as to legal matters, or such other counsel designated by the Company and reasonably acceptable to the Trustee, and (b) in the case of any Owner Trustee or any Loan Trustee, such counsel as they may designate, whether or not such counsel is an employee of any of them, and who shall be reasonably acceptable to the Trustee. Outstanding: when used with respect to Certificates of any series, means, as of the date of determination, all Certificates of such series theretofore authenticated and delivered under this Agreement, except: (i) Certificates of such series theretofore cancelled by the Registrar or delivered to the Trustee or the Registrar for cancellation; (ii) all of the Certificates of such series if money in the full amount required to make the final distribution with respect to such series pursuant to Section 11.01 hereof has been deposited with the Trustee of such series as provided in Section 4.01, pending distribution of such money to such Certificateholders pursuant to payment of such final distribution payment; and (iii) Certificates of such series in exchange for or in lieu of which other Certificates of such series have been authenticated and delivered pursuant to this Agreement. Owner Participant: means, with respect to any Equipment Note, the "Owner Participant", if any, as referred to in the Indenture pursuant to which such Equipment Note is issued and any permitted successor or assign of such Owner Participant; and "Owner Participants" at any time of determination means all of the Owner Participants thus referred to in the Indentures. Owner Trustee: means, with respect to any Equipment Note, the "Owner Trustee", if any, as referred to in the Indenture pursuant to which such Equipment Note is issued, not in its individual capacity but solely as trustee; and "Owner Trustees" means all of the Owner Trustees party to any of the related Indentures. Participation Agreement: means, with respect to the Certificates of any series, any participation or similar agreement providing for, among other things, the purchase of Equipment 6 Notes by the Trustee on behalf of the relevant Trust; and "Participation Agreements" means all of such agreements. Paying Agent: means, with respect to the Certificates of any series, the paying agent maintained and appointed for the Certificates of such series pursuant to Section 7.12. Permitted Investments: means obligations of the United States of America or agencies or instrumentalities thereof for the payment of which the full faith and credit of the United States of America is pledged, maturing in not more than 60 days after the date of acquisition thereof or such lesser time as is required for the distribution of any Special Payments on a Special Distribution Date. Person: means any person, including any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, trustee, unincorporated organization, or government or any agency or political subdivision thereof. Pool Balance: means, with respect to the Certificates of any series as of any date, except to the extent otherwise provided in the applicable Trust Supplements, (i) the original aggregate face amount of the Certificates of such series less (ii) the aggregate amount of all distributions made in respect of such Certificates other than distributions made in respect of interest or premium or reimbursement of any costs or expenses incurred in connection therewith. The Pool Balance as of any Regular Distribution Date or Special Distribution Date with respect to such series shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the Trust and the distribution thereof to be made on such date. Pool Factor: means, with respect to any series of Certificates as of any date, except to the extent otherwise provided in the applicable Trust Supplement, the quotient (rounded to the seventh decimal place, with 0.00000005 being rounded upward) computed by dividing (i) the Pool Balance of such series as of such date by (ii) the original aggregate face amount of the Certificates of such series. The Pool Factor as of any Regular Distribution Date or Special Distribution Date with respect to such series shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the Trust relating to such series and the distribution thereof to be made on such date. Postponed Notes: means, with respect to any Trust or the related series of Certificates, the Equipment Notes to be held in such Trust as to which a Postponement Notice shall have been delivered pursuant to Section 2.02(b). Postponement Notice: means, with respect to any Trust or the related series of Certificates, an Officer's Certificate of the Company: (i) requesting that the Trustee temporarily postpone purchase of the related Equipment Notes to a date later than the Issuance Date of such series of Certificates, (ii) identifying the amount of the purchase price of each such Equipment Note and the aggregate purchase price for all such Equipment Notes, (iii) setting forth the reasons for such postponement, and (iv) with respect to each such Equipment Note, either (a) setting or resetting a new Transfer Date (which shall be on or prior to the applicable Cut-off Date) for 7 payment by the Trustee of such purchase price and issuance of the related Equipment Note (subject to subsequent change from time to time in accordance with the relevant Participation Agreement), or (b) indicating that such new Transfer Date (which shall be on or prior to the applicable Cut-off Date) will be set by subsequent written notice not less than one Business Day prior to such new Transfer Date (subject to subsequent change from time to time in accordance with the relevant Participation Agreement). Potential Purchaser: has the meaning, with respect to any Certificateholder, specified in Section 6.01(d). Purchasing Certificateholder: has the meaning, with respect to any Certificateholder, specified in Section 6.01(d). Record Date: means, with respect to any Trust or the related series of Certificates, (i) for Scheduled Payments to be distributed on any Regular Distribution Date, other than the final distribution with respect to such series, the 15th day (whether or not a Business Day) preceding such Regular Distribution Date, or such other date as shall be specified for such series in the applicable Trust Supplement, and (ii) for Special Payments to be distributed on any Special Distribution Date, other than the final distribution with respect to such series, the 15th day (whether or not a Business Day) preceding such Special Distribution Date, or such other date as shall be specified for such series in the applicable Trust Supplement. Register and Registrar: means, with respect to the Certificates of any series, the register maintained and the registrar appointed pursuant to Sections 3.04 and 7.12, respectively. Regular Distribution Date: means, with respect to distributions of Scheduled Payments in respect of any series of Certificates, each date designated as such in this Agreement, until payment of all the Scheduled Payments to be made under the Equipment Notes held in the Trust have been made or until such Equipment Notes have been redeemed or otherwise prepaid in full. Request: means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an Opinion of Counsel as provided in Section 1.02 of this Basic Agreement. Responsible Officer: means, with respect to any Trustee, any Loan Trustee and any Owner Trustee, any officer in the Corporate Trust Department or similar department of the Trustee, such Loan Trustee or such Owner Trustee, as the case may be, or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject, and with respect to the Company, its Chairman of the Board, its President, any Senior Vice President, the Chief Financial Officer, any Vice President, the Treasurer, the Controller or the Secretary. Responsible Party: means, with respect to the Certificates of any series, the Company or the other Person designated as such in the related Trust Supplement. 8 Scheduled Payment: means, with respect to any Equipment Note, except to the extent otherwise provided in the applicable Trust Supplement, (i) any distribution in respect of principal or interest on such Equipment Note (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days after the date on which such payment is scheduled to be made) or (ii) any distribution in respect of principal or interest on such Equipment Note to the Holders of the Certificates of any series with funds drawn under the Liquidity Facility for such series (other than any such payment which is not in fact received by the Trustee or any Subordination Agent within five days after the date upon which payment is scheduled to be made), which payment in the case of clause (i) or clause (ii) represents an installment of principal on such Equipment Note at the stated maturity of such installment, or the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; provided, however, that any payment of principal, premium, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. SEC: means the Securities and Exchange Commission, as from time to time constituted or created under the Securities Exchange Act of 1934, as amended, or, if at any time such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. Selling Certificateholder: has the meaning, with respect to any Certificateholder, specified in Section 6.01(d). Special Distribution Date: means, with respect to the Certificates of any series, each date on which a Special Payment is to be distributed as specified in this Agreement. Special Payment: means, except to the extent otherwise provided in the applicable Trust Supplement, (i) any payment (other than a Scheduled Payment) in respect of, or any proceeds of, any Equipment Note held in a Trust or the Collateral or Trust Indenture Estate, as the case may be (in each case, as defined in each Indenture relating to such Trust), (ii) the amounts required to be distributed pursuant to the last paragraph of Section 2.02(b), or (iii) the amounts required to be distributed pursuant to the penultimate paragraph of Section 2.02(b). Special Payments Account: means, with respect to the Certificates of any series, the account or accounts created and maintained for such series pursuant to Section 4.01(b) and the related Trust Supplement. Specified Investments: means, with respect to any Trust, unless otherwise specified in the related Trust Supplement, (i) obligations of or guaranteed by the United States Government, (ii) open market commercial paper of any corporation incorporated under the laws of the United States of America or any State thereof rated at least P-2 or its equivalent by Moody's Investors Service, Inc. or at least A-2 or its equivalent by Standard & Poor's Ratings Services (including the Trustee if such conditions are met), (iii) certificates of deposit issued by commercial banks organized under the laws of the United States or of any political subdivision thereof having a combined capital and surplus in excess of $500,000,000 which banks or their holding companies have a rating of A or its equivalent by Moody's Investors Service, Inc. or A2 or its equivalent by 9 Standard & Poor's Ratings Services (including the Trustee if such conditions are met); provided, however, that the aggregate amount at any one time so invested in certificates of deposit issued by any one bank shall not exceed 5% of such bank's capital and surplus, (iv) United States dollar denominated offshore certificates of deposit issued by, or offshore time deposits with, any commercial bank described in (iii) or any subsidiary thereof, and (v) repurchase agreements with any financial institution having combined capital and surplus of at least $500,000,000 (including the Trustee if such conditions are met) with any of the obligations described in clauses (i) through (iv) as collateral; provided further that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase Federal Funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "Specified Investment" unless the final maturity or date of return of such investment is on or before the Special Distribution Date next following the Cut-off Date for such Trust by at least 15 days. Subordination Agent: has the meaning, with respect to the Certificates of any series, specified therefor in the relevant Intercreditor Agreement. Substitute Aircraft: means, with respect to any Trust, any Aircraft of a type specified in this Agreement and, at the election of the Company, substituted prior to the applicable Cut-off Date, if any, pursuant to the terms of this Agreement. Transfer Date: has the meaning, with respect to the Certificates of any series, assigned to that term or any of the terms "Delivery Date", "Funding Date" or "Closing Date" in any relevant Participation Agreement, and in any event refers to any such date as it may be changed from time to time in accordance with the terms of such Participation Agreement. Triggering Event: has the meaning, with respect to the Certificates of any series, specified therefor in the relevant Intercreditor Agreement. Trust: means, with respect to the Certificates of any series, the separate trust created under this Agreement. Trustee: means, with respect to any particular Trust, the institution executing this Agreement as the Trustee, or its successor in interest, and any successor or other trustee appointed as provided herein (it being understood that the same institution need not act as the Trustee in respect of all of the Trusts created pursuant to this Basic Agreement and the Trust Supplements). Trust Indenture Act: means, with respect to any particular Trust, the Trust Indenture Act of 1939, as amended and in force at the date as of which the related Trust Supplement was executed. Trust Property: means, with respect to any Trust, except to the extent otherwise provided in the applicable Trust Supplement, (i) subject to any related Intercreditor Agreement, the Equipment Notes held as the property of such Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) debt instruments, if any, issued by the Company in accordance with the first paragraph of Section 2.02(b), (iii) funds from time to time deposited 10 in the related Escrow Account, the related Certificate Account and the related Special Payments Account and, subject to any related Intercreditor Agreement, any proceeds from the sale by the Trustee pursuant to Article VI hereof of any Equipment Note referred to in (i) above, (iv) all rights of such Trust and the Trustee, on behalf of the Trust, under any Intercreditor Agreement or Liquidity Facility, including, without limitation, all rights to receive all monies and other property payable thereunder, and (v) all monies or other property receivable under any Intercreditor Agreement or Liquidity Facility for such Trust. Trust Supplement: means an agreement supplemental hereto pursuant to which (i) a separate Trust is created for the benefit of the Holders of the Certificates of a series, (ii) the issuance of the Certificates of such series representing fractional undivided interests in such Trust is authorized and (iii) the terms of the Certificates of such series are established, as such agreement may from time to time be supplemented, amended or otherwise modified. Section 1.02. Compliance Certificates and Opinions. Upon any application or request (except with respect to matters set forth in Article II) by the Company, any Owner Trustee or any Loan Trustee to the Trustee to take any action under any provision of this Basic Agreement or, in respect of the Certificates of any series, this Agreement, the Company, such Owner Trustee or such Loan Trustee, as the case may be, shall furnish to the Trustee (i) an Officer's Certificate stating that, in the opinion of the signer or signers, all conditions precedent, if any, provided for in this Basic Agreement or this Agreement relating to the proposed action have been satisfied and (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been satisfied, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Basic Agreement or this Agreement relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Basic Agreement or, in respect of the Certificates of any series, this Agreement (other than a certificate provided pursuant to Section 8.04(d)) or any Trust Supplement shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions in this Basic Agreement or this Agreement relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been satisfied. 11 Section 1.03. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters and any such Person may certify or give an opinion as to such matters in one or several documents. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Basic Agreement or, in respect of the Certificates of any series, this Agreement, they may, but need not, be consolidated and form one instrument. Section 1.04. Directions of Certificate Holders. (a) Any direction, consent, request, demand, authorization, notice, waiver or other action provided by this Agreement or in respect of the Certificates of any series to be given or taken by Certificateholders (a "Direction") may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Certificateholders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, when it is expressly required pursuant to this Agreement, to the Company or any Loan Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Certificateholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent or proxy shall be sufficient for any purpose of this Agreement and conclusive in favor of the Trustee, the Company and the related Loan Trustee, if made in the manner provided in this Section 1.04. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or such other officer, and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other reasonable manner which the Trustee deems sufficient. (c) In determining whether the Certificateholders of the requisite Fractional Undivided Interests of Certificates of any series Outstanding have given any Direction under this Agreement, Certificates owned by the Company, any related Owner Trustee, any related Owner Participant or any Affiliate of any such Person shall be disregarded and deemed not to be Outstanding for purposes of any such determination. In determining whether the Trustee is protected in relying upon any such Direction, only Certificates which the Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of the Certificates of any series Outstanding, such Certificates shall not be so disregarded, and 12 (ii) if any amount of Certificates of any series owned by any such Person have been pledged in good faith, such Certificates shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not the Company, any related Owner Trustee, any related Owner Participant or any Affiliate of any such Person. (d) The Company may, at its option, by delivery of an Officer's Certificate to the Trustee, set a record date to determine the Certificateholders in respect of the Certificates of any series entitled to give any Direction. Notwithstanding Section 316(c) of the Trust Indenture Act, such record date shall be the record date specified in such Officer's Certificate, which shall be a date not more than 30 days prior to the first solicitation of Certificateholders of the applicable series in connection therewith. If such a record date is fixed, such Direction may be given before or after such record date, but only the Certificateholders of the applicable series of record at the close of business on such record date shall be deemed to be Certificateholders for the purposes of determining whether Certificateholders of the requisite proportion of Outstanding Certificates of such series have authorized or agreed or consented to such Direction, and for that purpose the Outstanding Certificates of such series shall be computed as of such record date; provided, however, that no such Direction by the Certificateholders on such record date shall be deemed effective unless it becomes effective pursuant to the provisions of this Agreement not later than one year after such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be deemed cancelled and of no effect). (e) Any Direction by the Holder of any Certificate shall bind the Holder of every Certificate issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such Direction is made upon such Certificate. (f) Except as otherwise provided in Section 1.04(c), Certificates of any series owned by or pledged to any Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority or distinction as among all of the Certificates of such series. (g) The Company and the Trustee may make reasonable rules for action by or at a meeting of Certificateholders. ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES; ACQUISITION OF TRUST PROPERTY Section 2.01. Amount Unlimited; Issuable in Series. (a) The aggregate face amount of Certificates that may be authenticated and delivered under this Basic Agreement is unlimited. The Certificates may be issued from time to time in one or more series and shall be designated generally as the "Pass Through Certificates", with such further designations added or incorporated in such title for the Certificates of each series as are specified in the related Trust 13 Supplement. Each Certificate shall bear upon its face the designation so selected for the series to which it belongs. All Certificates of the same series shall be substantially identical except that the Certificates of a series may differ as to denomination and as may otherwise be provided in the Trust Supplement establishing the Certificates of such series. Each series of Certificates issued pursuant to this Agreement will evidence fractional undivided interests in the related Trust and, except as may be specified in any Intercreditor Agreement or in the applicable Trust Supplement, will have no rights, benefits or interests in respect of any other Trust or the Trust Property held therein. All Certificates of the same series shall be in all respects equally and ratably entitled to the benefits of this Agreement without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Agreement. (b) The following matters shall be established with respect to the Certificates of each series issued hereunder by a Trust Supplement executed and delivered by and between the Company and the Trustee: (1) the formation of the Trust as to which the Certificates of such series represent fractional undivided interests and its designation (which designation shall distinguish such Trust from each other Trust created under this Basic Agreement and a Trust Supplement); (2) the specific title of the Certificates of such series (which title shall distinguish the Certificates of such series from each other series of Certificates created under this Basic Agreement and a Trust Supplement); (3) subject to Section 2.01(a) hereof, any limit upon the aggregate face amount of the Certificates of such series which may be authenticated and delivered under this Basic Agreement (which limit shall not pertain to Certificates authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Certificates of the series pursuant to Sections 3.03, 3.04, 3.05(d) and 3.06); (4) the Cut-off Date with respect to the Certificates of such series and the related Trust; (5) the Regular Distribution Dates applicable to the Certificates of such series; (6) the Special Distribution Dates applicable to the Certificates of such series; (7) if other than as provided in Section 3.04 or Section 7.12(b), the Registrar or the Paying Agent for the Certificates of such series, including any Co-Registrar or additional Paying Agent; (8) if other than as provided in Section 3.01, the denominations in which the Certificates of such series shall be issuable; (9) the specific form of the Certificates of such series (including the interest 14 rate applicable thereto) and whether or not Certificates of such series are to be issued as Book-Entry Certificates and, if such Certificates are to be Book-Entry Certificates, the form of Letter of Representations, if any; (10) a description of the Equipment Notes to be acquired and held in the Trust formed by such Trust Supplement and of the related Aircraft and Note Documents; (11) provisions with respect to the terms for which the definitions set forth in Article I hereof or the terms of any Section hereof, including Section 11.01 hereof, permit or require further specification in the related Trust Supplement; (12) any restrictions (including legends) in respect of ERISA or tax matters; (13) the acceptance of appointment by the institution named to act as Trustee with respect to such Trust, if different from the institution executing this Basic Agreement or its successor; (14) whether such series will be subject to an Intercreditor Agreement and, if so, the specific designation of such Intercreditor Agreement and the rights of Potential Purchasers upon the occurrence of a Triggering Event; (15) whether such series will have the benefit of a Liquidity Facility and, if so, any terms appropriate thereto; (16) whether there will be a deposit agreement, escrow agreement or other arrangement prior to the delivery of one or more Aircraft or the commencement of the Lease in respect of one or more Aircraft and, if so, any terms appropriate thereto; (17) the extent, if any, to which the Company may acquire Certificates and deliver such Certificates or cash to the respective Trusts and obtain the release of Equipment Notes or other Trust Property held by such Trusts; (18) if the Certificates of such series are to be issued in bearer form, the forms thereof and any other special terms relating thereto; (19) the "Responsible Party" for purposes of directing the Trustee to make Specified Investments; and (20) any other terms of the Certificates of such series (which terms shall not be inconsistent with the provisions of the Trust Indenture Act but may modify, amend, supplement or delete any of the terms of this Basic Agreement), including any terms of the Certificates of such series which may be required or advisable under United States laws or regulations or advisable (as determined by the Company) in connection with the marketing of Certificates of the series. 15 (c) At any time and from time to time after the execution and delivery of this Basic Agreement and a Trust Supplement forming a Trust and establishing the terms of Certificates of a series, Certificates of such series shall be executed, authenticated and delivered by the Trustee to the Person or Persons specified by the Company upon request of the Company and upon satisfaction or waiver of any conditions precedent set forth in such Trust Supplement or in any other document to which a Trustee is a party relating to the issuance of the Certificates of such series. Section 2.02. Acquisition of Equipment Notes. (a) Unless otherwise specified in the related Trust Supplement, on or prior to the Issuance Date of the Certificates of a series, the Trustee shall execute and deliver the related Participation Agreements in the form delivered to the Trustee by the Company. The Trustee shall issue and sell such Certificates, in authorized denominations and in such Fractional Undivided Interests, so as to result in the receipt of consideration in an amount equal to the aggregate purchase price of the Equipment Notes contemplated to be purchased by the Trustee under the related Participation Agreements and, concurrently therewith (unless the Company shall have delivered to the Trustee the Postponement Notice relating to one or more Postponed Notes pursuant to Subsection (b) below), the Trustee shall purchase, pursuant to the terms and conditions of the Participation Agreements, such Equipment Notes (except Postponed Notes, if any) at a purchase price equal to the amount of such consideration so received. Except as provided in Sections 3.03, 3.04, 3.05 and 3.06 hereof, the Trustee shall not execute, authenticate or deliver Certificates of such series in excess of the aggregate amount specified in this paragraph. The provisions of this Subsection (a) are subject to the provisions of Subsection (b) below. (b) If on or prior to the Issuance Date with respect to a series of Certificates the Company delivers to the Trustee a Postponement Notice relating to one or more Postponed Notes, the Trustee shall postpone the purchase of such Postponed Notes and shall deposit into an escrow account (as to the related Trust, the "Escrow Account") to be maintained as part of the related Trust an amount equal to the purchase price of such Postponed Notes (the "Escrowed Funds"). The portion of the Escrowed Funds so deposited with respect to any particular Postponed Notes shall be invested (a) by the Trustee at the direction and risk of, and for the benefit of, the Responsible Party in Specified Investments or (b) if provided in the Trust Supplement relating to such series of Certificates and subject to the terms and conditions set forth therein, in debt instruments of the Company, in each case (i) maturing no later than any scheduled Transfer Date relating to such Postponed Notes, or (ii) if no such Transfer Date has been scheduled, maturing on the next Business Day, or (iii) if subsequent to the giving of the applicable Postponement Notice the Company has given notice to the Trustee that such Postponed Notes will not be issued, maturing on the next applicable Special Distribution Date, if such investments are reasonably available for purchase. The Trustee shall make withdrawals from the Escrow Account only as provided in this Agreement. Upon request of the Company on one or more occasions and the satisfaction or waiver of the closing conditions specified in the applicable Participation Agreements on or prior to the related Cut-off Date, the Trustee shall purchase the applicable Postponed Notes, on the terms specified in such Participation Agreements, with the Escrowed Funds withdrawn from the Escrow Account. 16 The Trustee shall hold all Specified Investments until the maturity thereof and will not sell or otherwise transfer Specified Investments. If Specified Investments held in an Escrow Account mature prior to any applicable Transfer Date, any proceeds received on the maturity of such Specified Investments (other than any earnings thereon) shall be reinvested by the Trustee at the written direction and risk of, and for the benefit of, the Responsible Party in Specified Investments maturing as provided in the preceding paragraph. Subject to the provisions of the Intercreditor Agreement, any earnings on Specified Investments received from time to time by the Trustee shall be promptly distributed to the Responsible Party. The Responsible Party shall pay to the Trustee for deposit to the relevant Escrow Account an amount equal to any net losses on any Specified Investments made at its direction and risk as incurred. On any Regular Distribution Date in respect of the Certificates of any series occurring prior to the date of purchase of any Postponed Notes by the Trustee, the Responsible Party will pay (in immediately available funds) to the Trustee an amount equal to the interest that would have accrued on such Postponed Notes if such Postponed Notes had been purchased on the later of the Issuance Date or the previous Regular Distribution Date in respect of the Certificates of such series to, but not including, such Regular Distribution Date. On the first Regular Distribution Date in respect of the Certificates of any series following the purchase of any Postponed Notes by the Trustee, the Responsible Party will pay (in immediately available funds) to the Trustee an amount equal to the interest that would have accrued on such Postponed Notes if such Postponed Notes had been purchased on the later of the Issuance Date or the previous Regular Distribution Date in respect of the Certificates of such series to, but not including, the date of the purchase of such Postponed Notes by the Trustee. If, in respect of the Certificates of any series, the Company notifies the Trustee prior to the Cut-off Date that any Postponed Notes will not be issued on or prior to the Cut-off Date for any reason, on the next Special Distribution Date for such Certificates occurring not less than 15 days following the date of such notice, (i) the Responsible Party shall pay (in immediately available funds) to the Trustee for deposit in the related Special Payments Account, an amount equal to the interest that would have accrued on the Postponed Notes designated in such notice from the later of the Issuance Date or the previous Regular Distribution Date in respect of the Certificates of such series to, but not including, such Special Distribution Date and (ii) the Trustee shall transfer an amount equal to that amount of Escrowed Funds that would have been used to purchase the Postponed Notes designated in such notice and the amount paid by the Responsible Party pursuant to the immediately preceding clause (i) to the related Special Payments Account for distribution as a Special Payment in accordance with the provisions hereof. If, on such Cut-off Date, an amount equal to less than all of the Escrowed Funds (other than Escrowed Funds referred to in the immediately preceding paragraph) has been used to purchase Postponed Notes, on the next Special Distribution Date occurring not less than 15 days following such Cut-off Date (i) the Responsible Party shall pay to the Trustee for deposit in such Special Payments Account, in immediately available funds, an amount equal to the interest that would have accrued on such Postponed Notes contemplated to be purchased with such unused Escrowed Funds (other than Escrowed Funds referred to in the immediately preceding paragraph) but not so purchased from the later of the Issuance Date or the previous Regular Distribution 17 Date in respect of the Certificates of such series to, but not including, such Special Distribution Date and (ii) the Trustee shall transfer such unused Escrowed Funds and the amount paid by the Responsible Party pursuant to the immediately preceding clause (i) to such Special Payments Account for distribution as a Special Payment in accordance with the provisions hereof. Section 2.03. Acceptance by Trustee. The Trustee, by the execution and delivery of a Trust Supplement creating a Trust and establishing a series of Certificates, shall acknowledge its acceptance of all right, title and interest in and to the Trust Property to be acquired pursuant to Section 2.02 hereof and the related Participation Agreements and shall declare that the Trustee holds and will hold such right, title and interest for the benefit of all then present and future Certificateholders of such series, upon the trusts herein and in such Trust Supplement set forth. By the acceptance of each Certificate of such series issued to it under this Agreement, each initial Holder of such series as grantor of such Trust shall thereby join in the creation and declaration of such Trust. No Certificateholder of any series shall have legal title to any part of the Trust Property of the related Trust. Section 2.04. Limitation of Powers. Each Trust shall be constituted solely for the purpose of making the investment in the Equipment Notes provided for in the related Trust Supplement, and, except as set forth herein or in such related Trust Supplement, the Trustee shall not be authorized or empowered to acquire any other investments or engage in any other activities. Except to the extent otherwise provided in the applicable Trust Supplement, the Trustee shall not be authorized or empowered to do anything that would cause such Trust to fail to qualify as a "grantor trust" for federal income tax purposes (including as subject to this restriction, acquiring any Aircraft (as defined in the related Indentures) by bidding such Equipment Notes or otherwise, or taking any action with respect to any such Aircraft once acquired). ARTICLE III THE CERTIFICATES Section 3.01. Form, Denomination and Execution of Certificates. Except to the extent otherwise specified in the applicable Trust Supplement, the Certificates of each series shall be issued in fully registered form without coupons and shall be substantially in the form attached hereto as Exhibit A, with such omissions, variations and insertions as are permitted by this Agreement, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with any applicable laws, rules, regulations or the rules of any securities exchange on which such Certificates may be listed or to conform to any usage in respect thereof, or as may, consistently herewith, be determined by the Trustee or the officers executing such Certificates, as evidenced by the Trustee's or such officers' execution of the Certificates. Except as provided in Section 3.05, the definitive Certificates of such series shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner permitted by the rules of any securities exchange on which 18 the Certificates may be listed, all as determined by the officers executing such Certificates, as evidenced by their execution of such Certificates. Except as otherwise provided in the related Trust Supplement, the Certificates of each series shall be issued in minimum denominations of $1,000 or integral multiples thereof except that one Certificate of such series may be issued in a different denomination. The Certificates of such series shall be executed on behalf of the Trustee by manual or facsimile signature of a Responsible Officer of the Trustee. Certificates of any series bearing the manual or facsimile signature of an individual who was, at the time when such signature was affixed, authorized to sign on behalf of the Trustee shall be valid and binding obligations of the Trustee, notwithstanding that such individual has ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such office at the date of such Certificates. Section 3.02. Authentication of Certificates. (a) Except to the extent otherwise specified in the applicable Trust Supplement, on the Issuance Date, the Trustee shall duly execute, authenticate and deliver Certificates of each series in authorized denominations equaling in the aggregate the aggregate face amount of the Equipment Notes that may be purchased by the Trustee pursuant to the related Participation Agreements, and evidencing the entire ownership of the related Trust. Thereafter, the Trustee shall duly execute, authenticate and deliver the Certificates of such series as herein provided. (b) No Certificate of any series shall be entitled to any benefit under this Agreement, or be valid for any purpose, unless there appears on such Certificate a certificate of authentication substantially in the form set forth in Exhibit A hereto executed by the Trustee by manual signature, and such certificate of authentication upon any Certificate shall be conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. All Certificates of any series shall be dated the date of their authentication. Section 3.03. Temporary Certificates. Until definitive Certificates are ready for delivery, the Trustee shall execute, authenticate and deliver temporary Certificates of each series. Temporary Certificates of each series shall be substantially in the form of definitive Certificates of such series but may have insertions, substitutions, omissions and other variations determined to be appropriate by the officers executing the temporary Certificates of such series, as evidenced by their execution of such temporary Certificates. If temporary Certificates of any series are issued, the Trustee will cause definitive Certificates of such series to be prepared without unreasonable delay. After the preparation of definitive Certificates of such series, the temporary Certificates shall be exchangeable for definitive Certificates upon surrender of such temporary Certificates at the Corporate Trust Office or the office or agency of the Trustee designated for such purpose pursuant to Section 7.12, without charge to the Certificateholder. Upon surrender for cancellation of any one or more temporary Certificates, the Trustee shall execute, authenticate and deliver in exchange therefor a like face amount of definitive Certificates of like series, in authorized denominations and of a like Fractional Undivided Interest. Until so exchanged, such temporary Certificates shall be entitled to the same benefits under this Agreement as definitive Certificates of such series. 19 Section 3.04. Transfer and Exchange. The Trustee shall cause to be kept at the office or agency to be maintained by it in accordance with the provisions of Section 7.12 a register (the "Register") for each series of Certificates in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of Certificates of such series and of transfers and exchanges of such Certificates as herein provided. The Trustee shall initially be the registrar (the "Registrar") for the purpose of registering such Certificates of each series and transfers and exchanges of such Certificates as herein provided. All Certificates issued upon any registration of transfer or exchange of Certificates of any series shall be valid obligations of the applicable Trust, evidencing the same interest therein, and entitled to the same benefits under this Agreement, as the Certificates of such series surrendered upon such registration of transfer or exchange. Upon surrender for registration of transfer of any Certificate at the Corporate Trust Office or such other office or agency, the Trustee shall execute, authenticate and deliver, in the name of the designated transferee or transferees, one or more new Certificates of like series, in authorized denominations of a like aggregate Fractional Undivided Interest. At the option of a Certificateholder, Certificates may be exchanged for other Certificates of like series, in authorized denominations and of a like aggregate Fractional Undivided Interest, upon surrender of the Certificates to be exchanged at any such office or agency. Whenever any Certificates are so surrendered for exchange, the Trustee shall execute, authenticate and deliver the Certificates that the Certificateholder making the exchange is entitled to receive. Every Certificate presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar duly executed by the Certificateholder thereof or its attorney duly authorized in writing. No service charge shall be made to a Certificateholder for any registration of transfer or exchange of Certificates, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates. All Certificates surrendered for registration of transfer or exchange shall be cancelled and subsequently destroyed by the Trustee. Section 3.05. Book-Entry and Definitive Certificates. (a) Except for one Certificate of each series that may be issued in a denomination of other than an even multiple of $1,000, the Certificates of any series may be issued at the option of the Company in the form of one or more typewritten Certificates representing the Book-Entry Certificates of such series, to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Company. In such case, the Certificates of such series delivered to The Depository Trust Company shall initially be registered on the Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Certificate Owner will receive a definitive certificate representing such Certificate Owner's interest in the Certificates of such series, except as provided in Subsection (d) below. As to the Certificates of any such series (other than the one Certificate or such series issued in a denomination of other than an even multiple of $1,000), 20 unless and until definitive, fully registered Certificates (the "Definitive Certificates") have been issued pursuant to Subsection (d) below: (1) the provisions of this Section 3.05 shall be in full force and effect; (2) the Company, the Paying Agent, the Registrar and the Trustee may deal with the Clearing Agency for all purposes (including the making of distributions on the Certificates); (3) to the extent that the provisions of this Section 3.05 conflict with any other provisions of this Agreement (other than the provisions of any Trust Supplement expressly amending this Section 3.05 as permitted by this Basic Agreement), the provisions of this Section 3.05 shall control; (4) the rights of Certificate Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Certificate Owners and the Clearing Agency Participants; and until Definitive Certificates are issued pursuant to Subsection (d) below, the Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal, interest and premium, if any, on the Certificates to such Clearing Agency Participants; (5) such Certificates of such series may be transferred in whole, but not in part, and in the manner provided in Section 3.04, by the Clearing Agency holding such Certificates to a nominee of such Clearing Agency, or by such Clearing Agency to a successor Clearing Agency that has been selected or approved by the Company or to a nominee of such successor Clearing Agency; and (6) whenever this Agreement requires or permits actions to be taken based upon instructions or directions of Certificateholders of such series holding Certificates of such series evidencing a specified percentage of the Fractional Undivided Interests in the related Trust, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in Certificates of such series and has delivered such instructions to the Trustee. Neither the Company nor the Trustee shall have any obligation to determine whether the Clearing Agency has in fact received any such instructions. (b) Whenever notice or other communication to the Certificateholders of a series is required under this Agreement, unless and until Definitive Certificates shall have been issued pursuant to Subsection (d) below, the Trustee shall give all such notices and communications specified herein to be given to Certificateholders of such series to the Clearing Agency. 21 (c) Except as otherwise provided in the related Trust Supplement, the Trustee shall enter into the applicable Letter of Representations with respect to each series of Certificates and fulfill its responsibilities thereunder. (d) If with respect to the Certificates of any series (i) the Company advises the Trustee in writing that the Clearing Agency is no longer willing or able to discharge properly its responsibilities and the Trustee or the Company is unable to locate a qualified successor, (ii) the Company, at its option, advises the Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or (iii) after the occurrence of an Event of Default, Certificate Owners of Book-Entry Certificates of such series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the related Trust, by Act of such Certificate Owners delivered to the Company and the Trustee, advise the Company, the Trustee and the Clearing Agency through the Clearing Agency Participants in writing that the continuation of a book-entry system through the Clearing Agency Participants is no longer in the best interests of the Certificate Owners of such series, then the Trustee shall notify all Certificate Owners of such series, through the Clearing Agency, of the occurrence of any such event and of the availability of Definitive Certificates. Upon surrender to the Trustee of all the Certificates of such series held by the Clearing Agency, accompanied by registration instructions from the Clearing Agency Participants for registration of Definitive Certificates in the names of Certificate Owners of such series, the Trustee shall issue and deliver the Definitive Certificates of such series in accordance with the instructions of the Clearing Agency. Neither the Company, the Registrar, the Paying Agent nor the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such registration instructions. Upon the issuance of Definitive Certificates of such series, the Trustee shall recognize the Persons in whose names the Definitive Certificates are registered in the Register as Certificateholders hereunder. Neither the Company nor the Trustee shall be liable if the Trustee or the Company is unable to locate a qualified successor Clearing Agency. (e) The provisions of this Section 3.05 may be made inapplicable to any series or may be amended with respect to any series in the related Trust Supplement. (f) Unless and until Definitive Certificates of a series are issued pursuant to subsection (c) above, on the Record Date prior to each applicable Regular Distribution Date and Special Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such Record Date. Section 3.06. Mutilated, Destroyed, Lost or Stolen Certificates. If (i) any mutilated Certificate is surrendered to the Registrar, or the Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (ii) there is delivered to the Registrar and the Trustee such security, indemnity or bond as may be required by them to save each of them and the Company harmless, then, in the absence of notice to the Registrar or the Trustee that such destroyed, lost or stolen Certificate has been acquired by a protected purchaser (within the meaning of Article 8 of the Uniform Commercial Code in effect in any applicable 22 jurisdiction), and provided that the requirements of Section 8-405 of the Uniform Commercial Code in effect in any applicable jurisdiction are met, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate or Certificates of like series, in authorized denominations and of like Fractional Undivided Interest and bearing a number not contemporaneously outstanding. In connection with the issuance of any new Certificate under this Section 3.06, the Trustee shall require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee and the Registrar) connected therewith. Any duplicate Certificate issued pursuant to this Section 3.06 shall constitute conclusive evidence of the appropriate Fractional Undivided Interest in the related Trust, as if originally issued, whether or not the lost, stolen or destroyed Certificate is found at any time. The provisions of this Section 3.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Certificates. Section 3.07. Persons Deemed Owners. Prior to due presentment of a Certificate for registration of transfer, the Company, the Trustee, the Registrar and any Paying Agent shall deem and treat the Person in whose name any Certificate is registered (as of the day of determination) on the Register as the owner of such Certificate and the Certificateholder for the purpose of receiving distributions pursuant to Article IV and for all other purposes whatsoever, and none of the Company, the Trustee, the Registrar or any Paying Agent shall be affected by any notice to the contrary. All payments or distributions made to any such Person shall be valid and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable on any such Certificate. Section 3.08. Cancellation. All Certificates surrendered for payment or transfer or exchange shall, if surrendered to the Trustee or any agent of the Trustee other than the Registrar, be delivered to the Registrar for cancellation and shall promptly be cancelled by it. No Certificates shall be authenticated in lieu of or in exchange for any Certificates cancelled as provided in this Section 3.08, except as expressly permitted by this Agreement. All cancelled Certificates held by the Registrar shall be destroyed and a certification of their destruction delivered to the Trustee with a copy to the Company. Section 3.09. Limitation of Liability for Payments. All payments and distributions made to Certificateholders of any series in respect of the Certificates of such series shall be made only from the Trust Property of the related Trust and only to the extent that the Trustee has sufficient income or proceeds from such Trust Property to make such payments in accordance with the terms of Article IV of this Agreement. Each Certificateholder, by its acceptance of a Certificate, agrees that it will look solely to the income and proceeds from the Trust Property of the related Trust for any payment or distribution due to such Certificateholder pursuant to the terms of this Agreement and that it will not have any recourse to the Company, the Trustee, the Loan Trustees, any Owner Trustee or any Owner Participant except as otherwise 23 expressly provided in this Agreement, in any Note Document or in any related Intercreditor Agreement. The Company is a party to this Agreement solely for purposes of meeting the requirements of the Trust Indenture Act, and therefore shall not have any right, obligation or liability hereunder, or under the terms of any Trust Supplement or any Certificates (except as otherwise expressly provided herein or therein). Section 3.10. CUSIP Numbers. The Certificates may include "CUSIP" numbers (if then generally in use), and if so, the Trustee may use the CUSIP numbers in notices in respect of the Certificates; provided, however, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Certificates, that reliance may be placed only on the other identification numbers printed on the Certificates, and any such notice shall not be affected by any defect or omission of such CUSIP numbers. ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS Section 4.01. Certificate Account and Special Payments Account. (a) The Trustee shall establish and maintain on behalf of the Certificateholders of each series a Certificate Account as one or more non-interest-bearing accounts. The Trustee shall hold such Certificate Account in trust for the benefit of the Certificateholders of such series, and shall make or permit withdrawals therefrom only as provided in this Agreement or any Intercreditor Agreement. On each day when a Scheduled Payment is made to the Trustee or the Subordination Agent, as the case may be, as holder of the Equipment Notes issued under the related Indenture, with respect to the Certificates of any series, the Trustee, upon receipt of the payments to it, shall immediately deposit the aggregate amount of such Scheduled Payment in the applicable Certificate Account. (b) The Trustee shall establish and maintain on behalf of the Certificateholders of each series a Special Payments Account as one or more accounts, which shall be non-interest bearing except as provided in Section 4.04. The Trustee shall hold the Special Payments Account in trust for the benefit of the Certificateholders of such series and shall make or permit withdrawals therefrom only as provided in this Agreement or any Intercreditor Agreement. On each day when one or more Special Payments are made to the Trustee or the Subordination Agent, as the case may be, as holder of the Equipment Notes issued under the related Indenture or to the Trustee pursuant to the last two paragraphs of Section 2.02(b) with respect to the Certificates of any series, the Trustee, upon receipt of the payments to it, shall immediately deposit the aggregate amount of such Special Payments in the applicable Special Payments Account. (c) The Trustee shall present (or, if applicable, cause the Subordination Agent to present) to the Loan Trustee to which an Equipment Note relates such Equipment Note on the date of its stated final maturity or, in the case of any Equipment Note which is to be redeemed or 24 purchased in whole pursuant to the related Indenture, on the applicable redemption or purchase date under such Indenture. Section 4.02. Distributions from Certificate Account and Special Payments Account. (a) Subject to the provisions of any Intercreditor Agreement, on each Regular Distribution Date with respect to a series of Certificates or as soon thereafter as the Trustee has confirmed receipt of the payment of all or any part of the Scheduled Payments due on the Equipment Notes held in the related Trust on such date, the Trustee shall distribute out of the applicable Certificate Account the entire amount deposited therein pursuant to Section 4.01(a). There shall be so distributed to each Certificateholder of record of such series on the Record Date with respect to such Regular Distribution Date (other than as provided in Section 11.01 concerning the final distribution) by check mailed to such Certificateholder, at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Trust held by such Certificateholder) of the total amount in the applicable Certificate Account, except that, with respect to Certificates registered on the Record Date in the name of a Clearing Agency (or its nominee), such distribution shall be made by wire transfer in immediately available funds to the account designated by such Clearing Agency (or such nominee). (b) Subject to the provisions of any Intercreditor Agreement, on each Special Distribution Date with respect to any Special Payment with respect to a series of Certificates or as soon thereafter as the Trustee has confirmed receipt of any Special Payments due on the Equipment Notes held in the related Trust or realized upon the sale of such Equipment Notes, the Trustee shall distribute out of the applicable Special Payments Account the entire amount of such applicable Special Payment deposited therein pursuant to Section 4.01(b). There shall be so distributed to each Certificateholder of record of such series on the Record Date with respect to such Special Distribution Date (other than as provided in Section 11.01 concerning the final distribution) by check mailed to such Certificateholder, at the address appearing in the Register, such Certificateholder's pro rata share (based on the aggregate Fractional Undivided Interest in the related Trust held by such Certificateholder) of the total amount in the applicable Special Payments Account on account of such Special Payment, except that, with respect to Certificates registered on the Record Date in the name of a Clearing Agency (or its nominee), such distribution shall be made by wire transfer in immediately available funds to the account designated by such Clearing Agency (or such nominee). (c) The Trustee shall, at the expense of the Company, cause notice of each Special Payment with respect to a series of Certificates to be mailed to each Certificateholder of such series at his address as it appears in the Register. Subject to the provisions of any Intercreditor Agreement: (i) in the event of redemption or purchase of Equipment Notes held in the related Trust, such notice shall be mailed not less than 15 days prior to the Special Distribution Date for the Special Payment resulting from such redemption or purchase, which Special Distribution Date shall be the date of such redemption or purchase; (ii) in the event that the Trustee receives a notice from the Company pursuant to Section 2.02(b) that Postponed Notes will not be purchased by the Trustee, such notice of Special Payment shall be mailed as soon as practicable after receipt of such notice from the Company and shall state the Special Distribution Date for such Special Payment, which shall occur 15 days after the date of such notice of Special 25 Payment or (if such 15th day is not practicable) as soon as practicable thereafter; (iii) in the event that any Special Payment is to be made pursuant to the last paragraph of Section 2.02(b), such notice of Special Payment shall be mailed on the Cut-off Date (or, if such mailing on the Cut-off Date is not practicable, as soon as practicable after the Cut-off Date) and shall state the Special Distribution Date for such Special Payment, which shall occur 15 days after the date of such notice of Special Payment or (if such 15th day is not practicable) as soon as practicable thereafter; and (iv) in the case of any other Special Payments, such notice of Special Payment shall be mailed as soon as practicable after the Trustee has confirmed that it has received funds for such Special Payment and shall state the Special Distribution Date for such Special Payment, which shall occur 15 days after the date of such notice of Special Payment or (if such 15th day is not practicable) as soon as practicable thereafter. Notices mailed by the Trustee as provided in the paragraphs above shall set forth: (i) the Special Distribution Date and the Record Date therefor (except as otherwise provided in Section 11.01); (ii) the amount of the Special Payment (taking into account any payment to be made by the Responsible Party pursuant to Section 2.02(b)) for each $1,000 face amount Certificate and the amount thereof constituting principal, premium, if any, and interest; (iii) the reason for the Special Payment; and (iv) if the Special Distribution Date is the same date as a Regular Distribution Date for the Certificates of such series, the total amount to be received on such date for each $1,000 face amount Certificate. If the amount of premium, if any, payable upon the redemption or purchase of an Equipment Note has not been calculated at the time that the Trustee mails notice of a Special Payment, it shall be sufficient if the notice sets forth the other amounts to be distributed and states that any premium received will also be distributed. If any redemption or purchase of the Equipment Notes held in any Trust is cancelled, the Trustee, as soon as possible after learning thereof, shall cause notice thereof to be mailed to each Certificateholder of the related series at its address as it appears on the Register. Section 4.03. Statements to Certificateholders. (a) On each Regular Distribution Date and Special Distribution Date, the Trustee will include with each distribution to Certificateholders of the related series a statement, giving effect to the distribution to be made on such Regular Distribution Date or Special Distribution Date, and, except to the extent otherwise provided in the applicable Trust Supplement, setting forth the following information (per $1,000 aggregate face amount of Certificates as to (i) and (ii) below): (i) the amount of such distribution allocable to principal and the amount allocable to premium, if any; (ii) the amount of such distribution allocable to interest; and 26 (iii) the Pool Balance and the Pool Factor of the related Trust. With respect to the Certificates registered in the name of a Clearing Agency or its nominee, on the Record Date prior to each Regular Distribution Date and Special Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the Clearing Agency Participants reflected on the Clearing Agency's books as holding interests in the Certificates on such Record Date. On each Regular Distribution Date and Special Distribution Date, the applicable Trustee will mail to each such Clearing Agency Participant the statement described above and will make available additional copies as requested by such Clearing Agency Participants for forwarding to holders of the Certificates. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, except to the extent otherwise provided in the applicable Trust Supplement, the Trustee shall furnish to each Person who at any time during such calendar year was a Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i) and (a)(ii) above with respect to the related Trust for such calendar year or, in the event such Person was a Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Certificateholder may reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns. With respect to Certificates registered in the name of a Clearing Agency or its nominee, such statement and such other items shall be prepared on the basis of information supplied to the Trustee by the Clearing Agency Participants and shall be delivered by the Trustee to such Clearing Agency Participants to be available for forwarding by such Clearing Agency Participants to the holders of interests in the Certificates. Section 4.04. Investment of Special Payment Moneys. Any money received by the Trustee pursuant to Section 4.01(b) representing a Special Payment which is not distributed on the date received shall, to the extent practicable, be invested by the Trustee in Permitted Investments selected by the Company in telephonic (confirmed in writing) or written instructions to the Trustee pending distribution of such Special Payment pursuant to Section 4.02. Any investment made pursuant to this Section 4.04 shall be in such Permitted Investments having maturities not later than the date that such moneys are required to be used to make the payment required under Section 4.02 on the applicable Special Distribution Date and the Trustee shall hold any such Permitted Investments until maturity. Absent receipt of instructions from the Company, such Special Payment shall remain uninvested by the Trustee pending receipt of investment instructions. The Trustee shall have no liability with respect to any investment made pursuant to this Section 4.04, other than by reason of the willful misconduct or negligence of the Trustee. All income and earnings from such investments shall be distributed on such Special Distribution Date as part of such Special Payment. 27 ARTICLE V THE COMPANY Section 5.01. Maintenance of Corporate Existence. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as otherwise specifically permitted in Section 5.02; provided, however, that the Company shall not be required to preserve any right or franchise if the Company determines that the preservation thereof is no longer desirable in the conduct of the business of the Company. Section 5.02. Consolidation, Merger, Etc.. (a) The Company shall not consolidate with or merge into any other corporation under circumstances where the Company is not the surviving corporation or convey, transfer or lease substantially all of its assets as an entirety to any Person unless the corporation formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety shall be organized and validly existing under the laws of the United States of America or any state thereof or the District of Columbia, and such corporation or Person executes and delivers to the Trustee an agreement in form and substance reasonably satisfactory to the Trustee containing an assumption by such successor or transferee entity of the due and punctual performance and observance of each covenant and condition of this Agreement. (b) Upon any such consolidation, merger, conveyance, transfer or lease, the successor or transferee entity shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor or transferee entity had been named as the Company herein. (c) The Trustee may receive an Officer's Certificate and an Opinion of Counsel of the Company as conclusive evidence that any such consolidation, merger, conveyance, transfer or lease, and any such assumption, complies with the provisions of this Section 5.02. ARTICLE VI DEFAULT Section 6.01. Indenture Events of Default and Triggering Events. (a) If in respect of any Trust, any Indenture Event of Default shall occur and be continuing, then, and in each and every case, so long as such Indenture Event of Default shall be continuing, and subject to the provisions of any Intercreditor Agreement, the Trustee may vote all of the Equipment Notes issued under the related Indenture and held in such Trust, and, upon the Direction of the Certificateholders holding Certificates evidencing Fractional Undivided Interests in such Trust aggregating not less than a majority in interest in such Trust, the Trustee shall vote not less than a corresponding majority in interest of such Equipment Notes in favor of directing the Loan Trustee under such Indenture to declare the unpaid principal amount of the Equipment Notes 28 then outstanding to which such Indenture Event of Default relates and accrued interest thereon to be due and payable under, and in accordance with the provisions of, the relevant Indenture. In addition, if an Indenture Event of Default shall have occurred and be continuing under any Indenture, subject to the provisions of any Intercreditor Agreement, the Trustee may in accordance with the relevant Indenture vote the Equipment Notes held in the Trust to which such Indenture Event of Default relates to direct the Loan Trustee regarding the exercise of remedies provided in such Indenture. (b) In addition, after an Indenture Event of Default shall have occurred and be continuing with respect to any Equipment Note, subject to the provisions of any Intercreditor Agreement, the Trustee may in its discretion, and upon the Direction of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the related Trust shall, by such officer or agent as it may appoint, sell, convey, transfer and deliver such Equipment Note or Equipment Notes, without recourse to or warranty by the Trustee or any Certificateholder, to any Person. In any such case, the Trustee shall sell, assign, contract to sell or otherwise dispose of and deliver such Equipment Note or Equipment Notes in one or more parcels at public or private sale or sales, at any location or locations at the option of the Trustee, all upon such terms and conditions as it may reasonably deem advisable and at such prices as it may reasonably deem advisable, for cash. If the Trustee so decides or is required to sell or otherwise dispose of any Equipment Note pursuant to this Section, the Trustee shall take such of the actions described above as it may reasonably deem most effectual to complete the sale or other disposition of such Equipment Note, so as to provide for the payment in full of all amounts due on the related series of Certificates. Notwithstanding the foregoing, any action taken by the Trustee under this Section shall not, in the reasonable judgment of the Trustee, be adverse to the best interests of the Certificateholders of such series. (c) If an Intercreditor Agreement is applicable, upon the occurrence and during the continuation of any Indenture Event of Default under any Indenture, the Trustee may, to the extent it is the Controlling Party at such time (as determined pursuant to the related Intercreditor Agreement), direct the exercise of remedies as provided in such related Intercreditor Agreement. (d) If an Intercreditor Agreement is applicable, by acceptance of its Certificate, each Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event, each Certificateholder of Certificates of certain series (each, a "Potential Purchaser" and, collectively, the "Potential Purchasers") may have certain rights to purchase the Certificates of one or more other series, all as set forth in the Trust Supplement applicable to the Certificates held by such Potential Purchaser. The purchase price with respect to the Certificates of any series, and the procedure for such purchase, shall be specified in such Trust Supplement or the applicable Intercreditor Agreement. By acceptance of its Certificate, each Certificateholder (each, a "Selling Certificateholder" and, collectively, the "Selling Certificateholders") of a series that is subject to purchase by Potential Purchasers, all as set forth in the Trust Supplement applicable to the Certificates held by the Selling Certificateholders, agrees that, at any time after the occurrence and during the continuance of a Triggering Event, it will, upon payment of the applicable purchase price by one or more Potential Purchasers (upon such purchase, a "Purchasing Certificateholder"), forthwith sell, assign, transfer and convey to 29 such Purchasing Certificateholder (without recourse, representation or warranty of any kind except for its own acts) all of the right, title, interest and obligation of such Selling Certificateholder in this Agreement, any related Intercreditor Agreement, any related Liquidity Facility, the related Note Documents and all Certificates of such series held by such Selling Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) and the Purchasing Certificateholder shall assume all of such Selling Certificateholder's obligations under this Agreement, any related Intercreditor Agreement, any related Liquidity Facility and the related Note Documents. The Certificates of such series will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of any Selling Certificateholder to deliver any Certificates of such series and, upon such a purchase, (i) the only rights of the Selling Certificateholders will be to deliver the Certificates to the Purchasing Certificateholder and receive the purchase price for such Certificates of such series and (ii) if the Purchasing Certificateholder shall so request, such Selling Certificateholder will comply with all of the provisions of Section 3.04 hereof to enable new Certificates of such series to be issued to the Purchasing Certificateholder in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Certificates shall be borne by the Purchasing Certificateholder. Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of all or any part of the Equipment Notes held in the Trust made either under the power of sale given under this Agreement or otherwise for the enforcement of this Agreement, the following shall be applicable: (1) Certificateholders and Trustee May Purchase Equipment Notes. Any Certificateholder, the Trustee in its individual or any other capacity or any other Person may bid for and purchase any of the Equipment Notes held in the Trust, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Equipment Notes in their own absolute right without further accountability. (2) Receipt of Trustee Shall Discharge Purchaser. The receipt of the Trustee making such sale shall be a sufficient discharge to any purchaser for its purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or its personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (3) Application of Moneys Received Upon Sale. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Agreement or otherwise for the enforcement of this Agreement shall be applied as provided in Section 4.02. In the event that the proceeds of such sale of Equipment Notes are less than the principal amount of the Certificates of such series Outstanding, the Certificateholders shall have 30 no claim for such shortfall against the Company, the Trustee or any other Person including the related Owner Trustee or related Owner Participant, if any. Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit. If there is a failure to make payment of the principal of, premium, if any, or interest on any Equipment Note held in the related Trust, or if there is any failure to pay Rent (as defined in the relevant Lease) under any Lease when due and payable, then the Trustee, in its own name and as trustee of an express trust, as holder of such Equipment Notes, to the extent permitted by and in accordance with the terms of any related Intercreditor Agreement and any related Note Documents (subject to rights of the applicable Owner Trustee or Owner Participant, if any, to cure any such failure to pay principal of, premium, if any, or interest on any Equipment Note or to pay Rent under any Lease in accordance with the applicable Indenture and to the rights of the Lessee under any applicable Lease), shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on such Equipment Notes or under such Lease and may prosecute any such claim or proceeding to judgment or final decree with respect to the whole amount of any such sums so due and unpaid. All rights of action and of asserting claims under this Agreement, or under any of the Certificates, may be prosecuted and enforced by the Trustee without the possession of any of such Certificates or the production thereof in any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Certificateholders of the related series. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Agreement, any Trust Supplement, any Intercreditor Agreement or any Liquidity Facility to which the Trustee shall be a party) the Trustee shall be held to represent all the Certificateholders of the related series, and it shall not be necessary to make any such Certificateholders parties to any such proceedings. Section 6.04. Control by Certificateholders. Subject to Section 6.03 and any related Intercreditor Agreement, the Certificateholders holding Certificates of a series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the related Trust shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to such Trust or pursuant to the terms of such Intercreditor Agreement or any Liquidity Facility to which such Trustee is a party, or exercising any trust or power conferred on the Trustee under this Agreement or such Intercreditor Agreement or Liquidity Facility, including any right of the Trustee as Controlling Party under such Intercreditor Agreement or as holder of the Equipment Notes held in the related Trust; provided that: (1) such Direction shall not in the opinion of the Trustee be in conflict with any rule of law or with this Agreement and would not involve the Trustee in personal liability or expense; 31 (2) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Certificateholders of such series not taking part in such Direction; (3) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such Direction; and (4) if an Indenture Event of Default under a related Indenture shall have occurred and be continuing, such Direction shall not obligate the Trustee to vote more than a corresponding majority in interest of the related Equipment Notes held by the Trustee in favor of directing any action by the related Loan Trustee with respect to such Indenture Event of Default. Section 6.05. Waiver of Past Defaults. Subject to any related Intercreditor Agreement, the Certificateholders holding Certificates of a series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the related Trust (i) may on behalf of all of the Certificateholders of such series waive any past default or Event of Default hereunder and its consequences or (ii) if the Trustee is the Controlling Party, may direct the Trustee to instruct the applicable Loan Trustee to waive any past Indenture default, Indenture Event of Default or, if applicable, the corresponding Lease default, under any related Indenture and its consequences, and thereby annul any Direction given by such Certificateholders or the Trustee to such Loan Trustee with respect thereto, except a default: (1) in the deposit of any Scheduled Payment or Special Payment under Section 4.01 or in the distribution of any payment under Section 4.02 on the Certificates of a series; or (2) in the payment of the principal of, premium, if any, or interest on the Equipment Notes held in the related Trust; or (3) in respect of a covenant or provision hereof which under Article IX hereof cannot be modified or amended without the consent of each Certificateholder holding an Outstanding Certificate of the series affected thereby. Upon any such waiver, such default shall cease to exist with respect to the Certificates of such series and any Event of Default arising therefrom shall be deemed to have been cured for every purpose in respect of such series and any direction given by the Trustee on behalf of the Certificateholders of such series to the relevant Loan Trustee shall be annulled with respect thereto; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued under the relevant Indenture to waive the corresponding Indenture Event of Default (and, if applicable, the corresponding Lease default). 32 Section 6.06. Right of Certificateholders to Receive Payments Not to Be Impaired. Anything in this Agreement (including Section 6.07) to the contrary notwithstanding, but subject to any related Intercreditor Agreement, the right of any Certificateholder to receive distributions of payments required pursuant to Section 4.02 hereof on the applicable Certificates when due, or to institute suit for the enforcement of any such payment on or after the applicable Regular Distribution Date or Special Distribution Date, shall not be impaired or affected without the consent of such Certificateholder. Section 6.07. Certificateholders May Not Bring Suit Except Under Certain Conditions. A Certificateholder 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 Agreement for the appointment of a receiver or for the enforcement of any other remedy under this Agreement, unless: (1) such Certificateholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) Certificateholders holding Certificates of such series evidencing Fractional Undivided Interests aggregating not less than 25% of the related Trust shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 7.03(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no Direction inconsistent with such written request shall have been given to the Trustee during such 60-day period by Certificateholders holding Certificates of such series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the related Trust. Except to the extent provided in any applicable Intercreditor Agreement or in any applicable Trust Supplement, it is understood and intended that no one or more of the Certificateholders of any series shall have any right in any manner whatsoever hereunder or under the related Trust Supplement or under the Certificates of such series to (i) surrender, impair, waive, affect, disturb or prejudice any property in the Trust Property of the related Trust, or the lien of any related Indenture on any property subject thereto, or the rights of the Certificateholders of such series or the holders of the related Equipment Notes, (ii) obtain or seek to obtain priority over or preference with respect to any other such Certificateholder of such series or (iii) enforce any right under this Agreement, except in the manner provided in this Agreement and for the equal, ratable and common benefit of all the Certificateholders of such series. Section 6.08. Remedies Cumulative. Every right or remedy given hereunder to the Trustee or to any of the Certificateholders of any series shall not be exclusive of any other right or remedy or remedies, and every such right or remedy shall be cumulative and in addition 33 to every other right or remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. No delay or omission by the Trustee or of any such Certificateholder in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the applicable Owner Trustee, if any, or the Company, as the case may be, or to be an acquiescence therein. Section 6.09. Discontinuance of Proceedings. If the Trustee or any Certificateholder of any series institutes any proceeding to enforce any right, power or remedy under the related Trust, and such proceeding is discontinued or abandoned for any reason or is determined adversely to the Trustee or such Certificateholder, then and in every such case the applicable Owner Trustee, if any, and the applicable Indenture Trustee, the Trustee, the Certificateholders of such series and the Company shall, subject to any determination in such proceeding, be restored to their former positions and rights under such Trust with respect to the Trust Property and all rights, remedies and powers of the Trustee and such Certificateholders shall continue as if no such proceeding had been instituted. Section 6.10. Undertaking for Costs. All parties to this Agreement, and each Certificateholder by acceptance of a Certificate, shall be deemed to have agreed that, in any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act or by any other applicable law; provided, however, that neither this Section 6.10 nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company. ARTICLE VII THE TRUSTEE Section 7.01. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default in respect of a Trust, (1) the Trustee undertakes to perform such duties in respect of such Trust as are specifically set forth in this Agreement, the Intercreditor Agreement and the Note Documents, and no implied covenants or obligations shall be read into such agreements against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Agreement; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement. (b) In case an Event of Default in respect of a Trust has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Agreement in respect of such Trust, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 34 (c) No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this Subsection (c) shall not be construed to limit the effect of Subsection (a) of this Section 7.01; and (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. (3) Whether or not herein expressly so provided, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.01. Section 7.02. Notice of Defaults. As promptly as practicable after, and in any event within 90 days after, the occurrence of any default (as such term is defined below) hereunder known to the Trustee, the Trustee shall notify the Company, any related Owner Trustees, any related Owner Participants, the related Loan Trustees and the Certificateholders holding Certificates of the related series, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act unless such default shall have been cured or waived; provided that, in the case of defaults not relating to the payment of money, the Trustee shall not give such notice until the earlier of the time at which such default becomes an Event of Default and the expiration of 60 days from the occurrence of such default; and provided, however, that, except in the case of a default in the payment of the principal, premium, if any, or interest on any Equipment Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith shall determine that the withholding of such notice is in the interests of the Certificateholders of the related series. For the purpose of this Section 7.02 in respect of any Trust, the term "default" means any event that is, or after notice or lapse of time or both would become, an Event of Default in respect of that Trust or a Triggering Event under any Intercreditor Agreement. Section 7.03. Certain Rights of Trustee. Subject to the provisions of Section 315 of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Request; 35 (c) whenever in the administration of this Agreement or any Intercreditor Agreement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate of the Company, any related Owner Trustee or any related Loan Trustee; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or any Intercreditor Agreement at the Direction of any of the Certificateholders pursuant to this Agreement or any Intercreditor Agreement, unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity against the cost, expenses and liabilities which might be incurred by it in compliance with such Direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document; (g) the Trustee may execute any of the trusts or powers under this Agreement or any Intercreditor Agreement or perform any duties under this Agreement or any Intercreditor Agreement either directly or by or through agents or attorneys, and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it under this Agreement or any Intercreditor Agreement; (h) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the Direction of the Certificateholders holding Certificates of any series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the related Trust relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement or any Intercreditor Agreement; and (i) the Trustee shall not be required to expend or risk its own funds in the performance of any of its duties under this Agreement, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk is not reasonably assured to it. 36 Section 7.04. Not Responsible for Recitals or Issuance of Certificates. The recitals contained herein and in the Certificates of each series, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. Subject to Section 7.15, the Trustee makes no representations as to the validity or sufficiency of this Basic Agreement, any Equipment Notes, any Intercreditor Agreement, any Liquidity Facility to which the Trustee may be a party, the Certificates of any series, any Trust Supplement or any Note Documents, except that the Trustee hereby represents and warrants that this Basic Agreement has been, and each Trust Supplement, each Certificate, each Participation Agreement, each Intercreditor Agreement, and any such Liquidity Facility of, or relating to, each series will be, executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. Section 7.05. May Hold Certificates. The Trustee, any Paying Agent, Registrar or any of their Affiliates or any other agent, in their respective individual or any other capacity, may become the owner or pledgee of Certificates and, subject to Sections 310(b) and 311 of the Trust Indenture Act, if applicable, may otherwise deal with the Company, any Owner Trustees, any Owner Participants or the Loan Trustees with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. Section 7.06. Money Held in Trust. Money held by the Trustee or the Paying Agent in trust under this Agreement need not be segregated from other funds except to the extent required herein or by law and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such moneys except as provided for herein or in the applicable Trust Supplement. Section 7.07. Compensation and Reimbursement. The Company agrees: (1) to pay, or cause to be paid, to the Trustee from time to time such compensation for all services rendered by it hereunder as the Company and the Trustee may agree in writing from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and (2) except as otherwise expressly provided herein or in any Trust Supplement, to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Basic Agreement, any Trust Supplement, any Intercreditor Agreement or any Liquidity Facility to which the Trustee may be a party (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as is attributable to the Trustee's negligence, willful misconduct or bad faith or as may be incurred due to the Trustee's breach of its representations and warranties set forth in Section 7.15; and (3) to indemnify, or cause to be indemnified, the Trustee, solely in its 37 individual capacity, for, and to hold it harmless against, any loss, liability, tax (other than any tax referred to in the next paragraph or any tax attributable to the Trustee's compensation for serving as such), cost or expense incurred without negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of any Trust, including the costs and expenses of (a) defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder or under any Trust Supplement or (b) contesting the imposition of any such tax, except in each case for any such loss, liability, tax, cost or expense incurred by reason of the Trustee's breach of its representations and warranties set forth in Section 7.15 or in any Trust Supplement or the Trustee's failure to perform any of its obligations hereunder or under any Trust Supplement. The Trustee shall notify the Company promptly of any claim or tax for which it may seek indemnity. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel with the consent of the Company and the Company will pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made or any taxes paid, in settlement or otherwise, without its consent. The Trustee shall be entitled to reimbursement from, and shall have a lien prior to the Certificates of each series upon, all property and funds held or collected by the Trustee in its capacity as Trustee with respect to such series or the related Trust for any tax incurred without negligence, bad faith or willful misconduct, on its part, arising out of or in connection with the acceptance or administration of such Trust (other than any tax attributable to the Trustee's compensation for serving as such), including any costs and expenses incurred in contesting the imposition of any such tax. The Trustee shall notify the Company of any claim for any tax for which it seeks reimbursement. If the Trustee reimburses itself from the Trust Property of such Trust for any such tax, it will mail a brief report within 30 days setting forth the amount of such tax and the circumstances thereof to the Company and all Certificateholders of such series as their names and addresses appear in the Register. Section 7.08. Corporate Trustee Required; Eligibility. Each Trust shall at all times have a Trustee which is a bank, trust company or other financial institution organized and doing business under the laws of the United States or any state thereof, shall be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act and shall have a combined capital and surplus of at least $75,000,000 (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 $75,000,000). If such bank, trust company or other financial institution or such 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 7.08 the combined capital and surplus of such bank, trust company or other financial institution or such corporation shall be deemed to 38 be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Trustee ceases to be eligible in accordance with the provisions of this Section 7.08 to act as Trustee of any Trust, the Trustee shall resign immediately as Trustee of such Trust in the manner and with the effect specified in Section 7.09. If the Trustee has or acquires a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Agreement. Section 7.09. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee of any Trust pursuant to this Article VII shall become effective until the acceptance of appointment by the successor Trustee under Section 7.10. (b) The Trustee may resign at any time as Trustee of any or all Trusts by giving prior written notice thereof to the Company, the Authorized Agents, any related Owner Trustees and the related Loan Trustees. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Company, any related Owner Trustees and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time as Trustee of any Trust by Direction of the Certificateholders of the related series holding Certificates of such series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in such Trust delivered to the Trustee and to the Company, any related Owner Trustees and the related Loan Trustees. (d) If at any time in respect of any Trust: (1) the Trustee fails to comply with Section 310(b) of the Trust Indenture Act, if applicable, after written request therefor by the Company or by any Certificateholder who has been a bona fide Certificateholder for at least six months; or (2) the Trustee ceases to be eligible under Section 7.08 and fails to resign after written request therefor by the Company or by any such Certificateholder; or (3) the Trustee becomes incapable of acting or is adjudged a bankrupt or insolvent or files a bankruptcy petition, or a receiver of the Trustee or of its property is appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, (i) the Company may remove the Trustee or (ii) any Certificateholder of the related series who has been a bona fide Certificateholder for at least six months may, on 39 behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee of such Trust. (e) If a Responsible Officer of the Trustee obtains actual knowledge of an Avoidable Tax (as defined below) in respect of any Trust which has been or is likely to be asserted, the Trustee shall promptly notify the Company and shall, within 30 days of such notification, either relocate the administration of the Trust to another jurisdiction as described in the definition of "Avoidable Tax" or resign as Trustee of such Trust hereunder unless within such 30-day period the Trustee has received notice that the Company has agreed to pay such tax. Provided that there is a corporation in a jurisdiction where there are no Avoidable Taxes that is willing to act as Trustee and is eligible under Section 7.08, the Company shall promptly after any such resignation by such Trustee appoint a successor Trustee of such Trust in a jurisdiction where there are no Avoidable Taxes. As used herein, an "Avoidable Tax" in respect of such Trust means a state or local tax: (i) upon (w) such Trust, (x) the Trust Property of such Trust, (y) Certificateholders of such Trust or (z) the Trustee for which the Trustee is entitled to seek reimbursement from the Trust Property of such Trust, and (ii) which would be avoided if the Trust were administered in a different jurisdiction in the United States or if the Trustee were located in another state, or jurisdiction within a state, within the United States. A tax shall not be an Avoidable Tax in respect of any Trust if the Company or any Owner Trustee agrees to pay, and shall pay, such tax. (f) If the Trustee shall resign, be removed or become incapable of acting as Trustee of any Trust or if a vacancy shall occur in the office of the Trustee of any Trust for any cause, the Company shall promptly appoint a successor Trustee of such Trust. If, within one year after such resignation, removal or incapability, or other occurrence of such vacancy, a successor Trustee of such Trust shall be appointed by Direction of the Certificateholders of the related series holding Certificates of such series evidencing Fractional Undivided Interests aggregating not less than a majority in interest in such Trust delivered to the Company, any related Owner Trustees, the related Loan Trustee and the retiring Trustee, then the successor Trustee of such Trust so appointed shall, with the approval of the Company of such appointment, which approval shall not be unreasonably withheld, forthwith upon its acceptance of such appointment, become the successor Trustee of such Trust and supersede the successor Trustee of such Trust appointed by the Company as provided above. If no successor Trustee shall have been so appointed by the Company as provided above and accepted appointment in the manner hereinafter provided, the resigning Trustee or any Certificateholder who has been a bona fide Certificateholder of the related series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee of such Trust. (g) The successor Trustee of a Trust shall give notice of the resignation and removal of the Trustee and appointment of the successor Trustee by notifying the Company and the Certificateholders of the related series as their names and addresses appear in the Register. Each notice shall include the name of such successor Trustee and the address of its Corporate Trust Office. 40 Section 7.10. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute and deliver to the Company and to the retiring Trustee with respect to any or all Trusts an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee with respect to such Trust or Trusts shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to such Trust or Trusts. On request of the Company or the successor Trustee, such retiring Trustee shall execute and deliver an instrument transferring to such successor Trustee all such rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all Trust Property held by such retiring Trustee in respect of such Trusts hereunder (subject nevertheless to its lien, if any, provided for in Section 7.07) and all books and records, or true, correct and complete copies thereof, held by such retiring Trustee in respect of such Trusts hereunder. Upon request of any such successor Trustee, the Company, the retiring Trustee and such successor Trustee shall execute and deliver any and all instruments containing such provisions as shall be necessary or desirable to transfer and confirm to, and for more fully and certainly vesting in, such successor Trustee all such rights, powers and trusts. If a successor Trustee is appointed with respect to one or more (but not all) Trusts, the Company, the predecessor Trustee and each successor Trustee with respect to any Trust shall execute and deliver a supplemental agreement hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all of the rights, powers, trusts and duties of the predecessor Trustee with respect to the Trusts as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Basic Agreement and the applicable Trust Supplements as shall be necessary to provide for or facilitate the administration of the Trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental agreement shall constitute such Trustees as co-Trustees of the same Trust and that each such Trustee shall be Trustee of separate Trusts. No institution shall accept its appointment as a successor Trustee hereunder unless at the time of such acceptance such institution shall be qualified and eligible under this Article VII. Section 7.11. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such corporation shall be otherwise qualified and eligible under this Article VII, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Certificates shall have been executed or authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such execution or authentication and deliver the Certificates so executed or authenticated with the same effect as if such successor Trustee had itself executed or authenticated such Certificates. 41 Section 7.12. Maintenance of Agencies. (a) With respect to each series of Certificates, there shall at all times be maintained an office or agency in the location set forth in Section 12.04 where Certificates of such series may be presented or surrendered for registration of transfer or for exchange, and for payment thereof, and where notices and demands to or upon the Trustee in respect of such Certificates or this Agreement may be served; provided that, if it shall be necessary that the Trustee maintain an office or agency in another location with respect to the Certificates of any series (e.g., the Certificates of such series shall be represented by Definitive Certificates and shall be listed on a national securities exchange), the Trustee will make all reasonable efforts to establish such an office or agency. Written notice of the location of each such other office or agency and of any change of location thereof shall be given by the Trustee to the Company, any Owner Trustees, the Loan Trustees (in the case of any Owner Trustee or Loan Trustee, at its address specified in the Note Documents or such other address as may be notified to the Trustee) and the Certificateholders of such series. In the event that no such office or agency shall be maintained or no such notice of location or of change of location shall be given, presentations and demands may be made and notices may be served at the Corporate Trust Office of the Trustee. (b) There shall at all times be a Registrar and a Paying Agent hereunder with respect to the Certificates of each series. Each such Authorized Agent shall be a bank, trust company or other financial institution organized and doing business under the laws of the United States or any state thereof, with a combined capital and surplus of at least $75,000,000 (or combined capital and surplus in excess of $5,000,000, the obligations of which 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, with a combined capital and surplus of at least $75,000,000), and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by federal or state authorities. The Trustee shall initially be the Paying Agent and, as provided in Section 3.04, Registrar hereunder with respect to the Certificates of each series. Each Registrar other than the Trustee shall furnish to the Trustee, at stated intervals of not more than six months, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar. (c) any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent, if such successor corporation is otherwise eligible under this Section 7.12, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (d) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, the Company, any related Owner Trustees and the related Loan Trustees. The Company may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section 7.12 (when, in either case, no other Authorized Agent performing the functions of such Authorized Agent 42 shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent which has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section 7.12. The Company shall give written notice of any such appointment made by it to the Trustee, any related Owner Trustees and the related Loan Trustees; and in each case the Trustee shall mail notice of such appointment to all Certificateholders of the related series as their names and addresses appear on the Register for such series. (e) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses actually incurred to the extent set forth in Section 7.07(2). Section 7.13. Money for Certificate Payments to Be Held in Trust. All moneys deposited with any Paying Agent for the purpose of any payment on Certificates shall be deposited and held in trust for the benefit of the Certificateholders entitled to such payment, subject to the provisions of this Section 7.13. Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Certificateholders with respect to which such money was deposited. The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Agreement or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Section 7.14. Registration of Equipment Notes in Trustee's Name. Subject to the provisions of any Intercreditor Agreement and Section 12.03 hereof, the Trustee agrees that all Equipment Notes to be purchased by any Trust, Specified Investments, if any, to be held by the Trustee on behalf of a Trust and Permitted Investments, if any, to be held by the Trustee on behalf of a Trust shall be issued in the name of the Trustee as trustee for the applicable Trust or its nominee and held by the Trustee in trust for the benefit of the Certificateholders of such series, or, if not so held, the Trustee or its nominee shall be reflected as the owner of such Equipment Notes, Specified Investments or Permitted Investments, as the case may be, in the register of the issuer of such Equipment Notes, Specified Investments or Permitted Investments, as the case may be. In no event shall the Trustee invest in, or hold, Equipment Notes, Specified Investments or Permitted Investments in a manner that would cause the Trustee not to have the ownership interest in (or a securities entitlement with respect to) such Equipment Notes, Specified Investments or Permitted Investments under the applicable provisions of the Uniform Commercial Code in effect where the Trustee holds such Equipment Notes, Specified Investments or Permitted Investments or other applicable law then in effect. Section 7.15. Representations and Warranties of Trustee. The Trustee hereby represents and warrants that: (a) the Trustee is a national banking association duly organized and validly existing in good standing under the laws of the United States; 43 (b) the Trustee has full power, authority and legal right to execute, deliver and perform this Agreement, any Intercreditor Agreement, any Liquidity Facility, the Certificates and the Participation Agreements and has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement, any Intercreditor Agreement, any Liquidity Facility, the Certificates and the Participation Agreements; (c) the execution, delivery and performance by the Trustee of this Agreement, any Intercreditor Agreement, any Liquidity Facility, the Certificates and the Participation Agreements (i) will not violate any provision of any United States federal law or the law of the state of the United States where such Trustee is located and which governs the banking and trust powers of the Trustee or any order, writ, judgment, or decree of any court, arbitrator or governmental authority applicable to the Trustee or any of its assets, (ii) will not violate any provision of the articles of association or by-laws of the Trustee, and (iii) will not violate any provision of, or constitute, with or without notice or lapse of time or both, a default under, or result in the creation or imposition of any lien on any properties included in the Trust Property pursuant to the provisions of any mortgage, indenture, contract, agreement or other undertaking to which it is a party; (d) the execution, delivery and performance by the Trustee of this Agreement, any Intercreditor Agreement, any Liquidity Facility, the Certificates and the Participation Agreements will not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency of the United States or the state of the United States where such Trustee is located and regulating the banking and corporate trust activities of the Trustee, other than the filing of a Statement of Eligibility on Form T-1 in connection with the registration of any Certificates; (e) this Agreement, any Intercreditor Agreement, any Liquidity Facility, the Certificates and the Participation Agreements have been or will be duly executed and delivered by the Trustee and constitute or upon such execution and delivery will constitute the legal, valid and binding agreements of the Trustee, enforceable against it in accordance with their respective terms; provided, however, that enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally, and (ii) general principles of equity; and (f) the statements made by it in a Statement of Eligibility on Form T-1 supplied or to be supplied to the Company in connection with the registration of any Certificates are and will be true and accurate subject to the qualifications set forth therein; and that such statement complies and will comply in all material respects with the requirements of the Trust Indenture Act and the Securities Act. The representation and warranties set forth above shall be deemed to be made by the Trustee on each Issuance Date, except as otherwise provided in the applicable Trust Supplement. 44 Section 7.16. Withholding Taxes; Information Reporting. As to the Certificates of any series, the Trustee, as trustee of the related grantor trust created by this Agreement, shall exclude and withhold from each distribution of principal, premium, if any, and interest and other amounts due under this Agreement or under the Certificates of such series any and all withholding taxes applicable thereto as required by law. The 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 in respect of the Certificates of such series, to withhold such amounts and timely pay the same to the appropriate authority in the name of and on behalf of the Certificateholders of such series, 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 such Certificateholder of such series appropriate documentation showing the payment thereof, together with such additional documentary evidence as such Certificateholders may reasonably request from time to time. The Trustee agrees to file any other information reports as it may be required to file under United States law. Section 7.17. Trustee's Liens. The Trustee in its individual capacity agrees that it will, in respect of each Trust created by this Agreement, at its own cost and expense (and without right of indemnity hereunder, including Section 7.07), promptly take any action as may be necessary to duly discharge and satisfy in full any mortgage, pledge, lien, charge, encumbrance, security interest or claim ("Trustee's Liens") on or with respect to the Trust Property of such Trust which is attributable to the Trustee either (i) in its individual capacity and which is unrelated to the transactions contemplated by this Agreement or the related Note Documents or (ii) as Trustee hereunder or in its individual capacity and which arises out of acts or omissions which are not contemplated by this Agreement. Section 7.18. Preferential Collection of Claims. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. If the Trustee shall resign or be removed as Trustee, it shall be subject to Section 311(a) of the Trust Indenture Act to the extent provided therein. Section 7.19. Capacity in Which Acting. The Trustee acts hereunder and under any Trust not in its individual capacity but solely as trustee except as expressly provided herein or in the related Trust Supplement. ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 8.01. The Company to Furnish Trustee with Names and Addresses of Certificateholders. With respect to the Certificates of each series, the Company will furnish (or cause to be furnished) to the Trustee within 15 days after each Record Date with respect to a Scheduled Payment (and, in any case, at intervals of not more than six months), and at such other times as the Trustee may request in writing within 30 days after receipt by the Company of any such request, a list, in such form as the Trustee may reasonably require, of all information in the possession or control of the Company as to the names and addresses of the Certificateholders of such series, in each case as of a date not more than 15 days prior to the time such list is 45 furnished; provided, however, that so long as the Trustee is the sole Registrar for such series, no such list need be furnished; and provided further, that no such list need be furnished for so long as a copy of the Register is being furnished to the Trustee pursuant to Section 7.12. Section 8.02. Preservation of Information; Communications to Certificateholders. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Certificateholders of each series contained in the most recent list furnished to the Trustee as provided in Section 7.12 or Section 8.01, as the case may be, and the names and addresses of Certificateholders of each series received by the Trustee in its capacity as Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 7.12 or Section 8.01, as the case may be, upon receipt of a new list so furnished. Section 8.03. Reports by Trustee. Within 60 days after May 15 of each year commencing with the first full year following the issuance of any series of Certificates, the Trustee shall transmit to the Certificateholders of such series, as provided in Section 313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if required by and in compliance with Section 313(a) of the Trust Indenture Act. The Trustee shall also transmit to Certificateholders such reports, if any, as may be required pursuant to Section 313(b) of the Trust Indenture Act at the times and in the manner provided pursuant thereto and to Section 313(c) thereof. Section 8.04. Reports by the Company. The Company shall: (a) file with the Trustee, within 30 days after the Company is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the SEC, in accordance with rules and regulations prescribed by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations, provided the Company may fulfill the requirements of this Section 8.04(a) by providing the material described herein in an electronic format by electronic mail or accessible over the internet; (b) file with the Trustee and the SEC, in accordance with the rules and regulations prescribed by the SEC, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of the Company provided for in this Agreement, as may be required by such rules and regulations; (c) transmit to all Certificateholders, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, 46 documents and reports required to be filed by the Company pursuant to subsections (a) and (b) of this Section 8.04 as may be required by rules and regulations prescribed by the SEC; and (d) furnish to the Trustee, not less often than annually, a brief certificate from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Company's compliance with all conditions and covenants of the Company under this Agreement (it being understood that for purposes of this paragraph (d), such compliance shall be determined without regard to any grace period or requirement of notice provided under this Agreement). ARTICLE IX SUPPLEMENTAL AGREEMENTS Section 9.01. Supplemental Agreements Without Consent of Certificateholders. Without the consent of any Certificateholders, the Company may (but will not be required to), and the Trustee (subject to Section 9.03) shall, at the Company's request, at any time and from time to time, enter into one or more agreements supplemental hereto or, if applicable, to an Intercreditor Agreement, a Participation Agreement or a Liquidity Facility, for any of the following purposes: (1) to provide for the formation of a Trust, the issuance of a series of Certificates and other matters contemplated by Section 2.01(b); or (2) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company contained in this Agreement or of the Company's obligations under any Intercreditor Agreement, any Participation Agreement or any Liquidity Facility; or (3) to add to the covenants of the Company for the benefit of the Certificateholders of any series, or to surrender any right or power conferred upon the Company in this Agreement, any Participation Agreement, any Intercreditor Agreement or any Liquidity Facility; or (4) to cure any ambiguity or to correct any mistake or inconsistency contained herein or in any related Trust Supplement, any Intercreditor Agreement or any Liquidity Facility; or (5) to make or modify any other provision in regard to matters or questions arising under this Basic Agreement or any related Trust Supplement, any Intercreditor Agreement or any Liquidity Facility as the Company may deem necessary or desirable and that will not materially adversely affect the interests of the related Certificateholders; or (6) to comply with any requirement of the SEC, any applicable law, rules or 47 regulations of any exchange or quotation system on which the Certificates of any series are listed or of any regulatory body; or (7) to modify, eliminate or add to the provisions of this Agreement, any Intercreditor Agreement or any Liquidity Facility to such extent as shall be necessary to continue the qualification of this Agreement (including any supplemental agreement), any Intercreditor Agreement or any Liquidity Facility under the Trust Indenture Act or under any similar Federal statute hereafter enacted, and to add to this Agreement, any Intercreditor Agreement or any Liquidity Facility such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this Basic Agreement was executed or any corresponding provision in any similar Federal statute hereafter enacted; or (8) to evidence and provide for the acceptance of appointment by a successor Trustee under this Agreement, any Intercreditor Agreement, any Participation Agreement, any Indenture or any Liquidity Facility with respect to one or more Trusts and to add to or change any of the provisions of this Agreement, any Intercreditor Agreement or any Liquidity Facility as shall be necessary to provide for or facilitate the administration of the Trust hereunder and thereunder by more than one Trustee, pursuant to the requirements of Section 7.10; or (9) to provide the information required under Section 7.12 and Section 12.04 as to the Trustee; or (10) to add to or change any of the provisions of this Agreement or any Trust Supplement to such extent as shall be necessary to facilitate the issuance of Certificates in bearer form or to facilitate or provide for the issuance of Certificates in global form in addition to or in place of Certificates in certificated form; or (11) to provide for the delivery of agreements supplemental hereto or the Certificates of any series in or by any means of any computerized, electronic or other medium, including without limitation by computer diskette; or (12) to correct or supplement the description of any property constituting property of such Trust; or (13) to modify, eliminate or add to the provisions of this Basic Agreement or any Trust Supplement in order to reflect the substitution of a Substitute Aircraft for any aircraft; or (14) to make any other amendments or modifications hereto, provided that such 48 amendments or modifications shall only apply to Certificates of one or more series to be thereafter issued; provided, however, that no such supplemental agreement shall cause any Trust to become an association taxable as a corporation for United States federal income tax purposes. Section 9.02. Supplemental Agreements with Consent of Certificateholders. With respect to each separate Trust and the series of Certificates relating thereto, with the consent of the Certificateholders holding Certificates of such series (including consents obtained in connection with a consent solicitation, tender offer or exchange offer for the Certificates) evidencing Fractional Undivided Interests aggregating not less than a majority in interest in such Trust, by Direction of said Certificateholders delivered to the Company and the Trustee, the Company may (with the consent of the Owner Trustees, if any, relating to such Certificates, which consent shall not be unreasonably withheld), but shall not be obligated to, and the Trustee (subject to Section 9.03) shall, enter into an agreement or agreements supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, any Intercreditor Agreement or any Liquidity Facility to the extent applicable to such Certificateholders or of modifying in any manner the rights and obligations of such Certificateholders under this Agreement, any Intercreditor Agreement or any Liquidity Facility; provided, however, that no such agreement shall, without the consent of the Certificateholder of each Outstanding Certificate adversely affected thereby: (1) reduce in any manner the amount of, or delay the timing of, any receipt by the Trustee of payments on the Equipment Notes held in such Trust or distributions that are required to be made herein on any Certificate of such series, or change any date of payment on any Certificate of such series, or change the place of payment where, or the coin or currency in which, any Certificate of such series is payable (other than as provided for in such Certificate), or impair the right to institute suit for the enforcement of any such payment or distribution on or after the Regular Distribution Date or Special Distribution Date applicable thereto; or (2) except as permitted by this Agreement or the applicable Intercreditor Agreement or Liquidity Facility, permit the disposition of any Equipment Note included in the Trust Property of such Trust or otherwise deprive such Certificateholder of the benefit of the ownership of the Equipment Notes in such Trust; or (3) alter the priority of distributions specified in the relevant Intercreditor Agreement, if any, in a manner materially adverse to the interests of the Certificateholders of any series; or (4) modify any of the provisions of this Section 9.02 with respect to such series of Certificates, except to increase the specified percentage of the aggregate Fractional Undivided Interests of such Trust that is required for any supplemental agreement as set forth therein, or to provide that certain 49 other provisions of this Agreement cannot be modified or waived without the consent of the Certificateholder of each Certificate of such series affected thereby; or (5) cause any Trust to become an association taxable as a corporation for United States federal income tax purposes. It shall not be necessary for any Direction of such Certificateholders under this Section 9.02 to approve the particular form of any proposed supplemental agreement, but it shall be sufficient if such Direction shall approve the substance thereof. Section 9.03. Documents Affecting Immunity or Indemnity. If in the opinion of the Trustee any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or indemnity in favor of the Trustee under this Basic Agreement or any Trust Supplement, the Trustee may in its discretion decline to execute such document. Section 9.04. Execution of Supplemental Agreements. In executing, or accepting the additional trusts created by, any supplemental agreement permitted by this Article IX or the modifications thereby of the trusts created by this Agreement, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. Section 9.05. Effect of Supplemental Agreements. Upon the execution of any agreement supplemental to this Agreement under this Article IX, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes, and every Certificateholder of each series theretofore or thereafter authenticated and delivered hereunder shall be bound thereby to the extent applicable to such series. Section 9.06. Conformity with Trust Indenture Act. Every supplemental agreement executed pursuant to this Article IX shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.07. Reference in Certificates to Supplemental Agreements. Certificates of each series authenticated and delivered after the execution of any supplemental agreement applicable to such series pursuant to this Article IX may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental agreement; and, in such case, suitable notation may be made upon Outstanding Certificates of such series after proper presentation and demand. ARTICLE X AMENDMENTS TO INDENTURES AND OTHER NOTE DOCUMENTS Section 10.01. Amendments and Supplements to Indentures and Other Note Documents. In the event that the Trustee, as holder (or beneficial owner through the 50 Subordination Agent) of any Equipment Notes (or as a prospective purchaser of any Postponed Notes) in trust for the benefit of the Certificateholders of any series or as Controlling Party under an Intercreditor Agreement, receives (directly or indirectly through the Subordination Agent) a request for a consent to any amendment, modification, waiver or supplement under any Indenture or other Note Document, subject to Section 9.01 hereof, the Trustee shall forthwith send a notice of such proposed amendment, modification, waiver or supplement to each Certificateholder of such series registered on the Register as of the date of such notice. The Trustee shall request from the Certificateholders of such series a Direction as to (a) whether or not to take or refrain from taking (or direct the Subordination Agent to take or refrain from taking) any action which a holder of (or, with respect to Postponed Notes, a prospective purchaser of) such Equipment Note has the option to direct, (b) whether or not to give or execute (or direct the Subordination Agent to give or execute) any waivers, consents, amendments, modifications or supplements as a holder of (or, with respect to Postponed Notes, a prospective purchaser of) such Equipment Note or a Controlling Party and (c) how to vote (or direct the Subordination Agent to vote) any Equipment Note (or, with respect to a Postponed Note, its commitment to acquire such Postponed Note) if a vote has been called for with respect thereto. Provided such a request for Certificateholder Direction shall have been made, in directing any action or casting any vote or giving any consent as the holder of any Equipment Note (or in directing the Subordination Agent in any of the foregoing), (i) other than as Controlling Party, the Trustee shall vote for or give consent to any such action with respect to such Equipment Note (or Postponed Note) in the same proportion as that of (A) the aggregate face amount of all Certificates actually voted in favor of or for giving consent to such action by such Direction of Certificateholders to (B) the aggregate face amount of all Outstanding Certificates and (ii) as Controlling Party, the Trustee shall vote as directed in such Certificateholder Direction by the Certificateholders of such series evidencing a Fractional Undivided Interest aggregating not less than a majority in interest in the related Trust. For purposes of the immediately preceding sentence, a Certificate shall have been "actually voted" if the Holder of such Certificate has delivered to the Trustee an instrument evidencing such Holder's consent to such Direction prior to one Business Day before the Trustee directs such action or casts such vote or gives such consent. Notwithstanding the foregoing, but subject to Section 6.04 and any Intercreditor Agreement, the Trustee may, with respect to the Certificates of any series, in its own discretion and at its own direction, consent and notify the relevant Loan Trustee of such consent (or direct the Subordination Agent to consent and notify the Loan Trustee of such consent) to any amendment, modification, waiver or supplement under any related Indenture or any other related Note Document if an Event of Default hereunder shall have occurred and be continuing or if such amendment, modification, waiver or supplement will not materially adversely affect the interests of the Certificateholders of such series. ARTICLE XI TERMINATION OF TRUSTS Section 11.01. Termination of the Trusts. In respect of each Trust created by the Basic Agreement as supplemented by a related Trust Supplement, the respective obligations and responsibilities of the Company and the Trustee with respect to such Trust shall terminate upon the distribution to all Holders of Certificates of the series of such Trust and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all 51 property held as part of the Trust Property of such Trust; provided, however, that in no event shall such Trust continue beyond the final expiration date determined as provided in such Trust Supplement. Notice of any termination of a Trust, specifying the applicable Regular Distribution Date (or applicable Special Distribution Date, as the case may be) upon which the Certificateholders of any series may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be mailed promptly by the Trustee to Certificateholders of such series not earlier than 60 days and not later than 15 days preceding such final distribution specifying (i) the Regular Distribution Date (or Special Distribution Date, as the case may be) upon which the proposed final payment of the Certificates of such series will be made upon presentation and surrender of Certificates of such series at the office or agency of the Trustee therein specified, (ii) the amount of any such proposed final payment, and (iii) that the Record Date otherwise applicable to such Regular Distribution Date (or Special Distribution Date, as the case may be) is not applicable, payments being made only upon presentation and surrender of the Certificates of such series at the office or agency of the Trustee therein specified. The Trustee shall give such notice to the Registrar at the time such notice is given to Certificateholders of such series. Upon presentation and surrender of the Certificates of such series in accordance with such notice, the Trustee shall cause to be distributed to Certificateholders of such series amounts distributable on such Regular Distribution Date (or Special Distribution Date, as the case may be) pursuant to Section 4.02. In the event that all of the Certificateholders of such series shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders of such series to surrender their Certificates for cancellation and receive the final distribution with respect thereto. No additional interest shall accrue on the Certificates of such series after any Regular Distribution Date (or Special Distribution Date, as the case may be) of such series, as specified in the first written notice. If any money held by the Trustee for the payment of distributions on the Certificates of such series remains unclaimed for two years (or such lesser time as the Trustee shall be satisfied, after 60 days' notice from the Company, is one month prior to the escheat period provided under applicable law) after the final distribution date with respect thereto, the Trustee shall pay to each Loan Trustee the appropriate amount of money relating to such Loan Trustee and shall give written notice thereof to any related Owner Trustees and the Company. ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. Limitation on Rights of Certificateholders. (a) The insolvency, death or incapacity of any Certificateholder of any series shall not operate to terminate this Agreement or the related Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations and liabilities of 52 the parties hereto or any of them. No Certificateholder of any series shall be entitled to revoke the related Trust. (b) No transfer, by operation of law or otherwise, of any Certificate or other right, title and interest of any Certificateholder in and to the applicable Trust Property or under the related Trust shall operate to terminate the Trust or entitle such Certificateholder or any successor or transferee of such Certificateholder to an accounting or to the transfer to it of legal title to any part of such Trust Property. Section 12.02. Certificates Nonassessable and Fully Paid. Certificateholders of each series shall not be personally liable for obligations of the related Trust, the Fractional Undivided Interests represented by the Certificates of such series shall be nonassessable for any losses or expenses of such Trust or for any reason whatsoever, and Certificates of such series upon authentication thereof by the Trustee pursuant to Section 3.02 are and shall be deemed fully paid. No Certificateholder of such series shall have any right (except as expressly provided herein) to vote or in any manner otherwise control the operation and management of the related Trust Property, the related Trust, or the obligations of the parties hereto, nor shall anything set forth herein, or contained in the terms of the Certificates of such series, be construed so as to constitute the Certificateholders of such series from time to time as partners or members of an association. Section 12.03. Registration of Equipment Notes in Name of Subordination Agent. If a Trust is party to an Intercreditor Agreement, the Trustee agrees that all Equipment Notes to be purchased by such Trust may be issued in the name of the Subordination Agent under such Intercreditor Agreement or its nominee and held by such Subordination Agent in trust for the benefit of the Certificateholders, or, if not so held, such Subordination Agent or its nominee shall be reflected as the owner of such Equipment Notes in the register of the issuer of such Equipment Notes. Section 12.04. Notices. (a) Unless otherwise expressly specified or permitted by the terms hereof or in the applicable Trust Supplement with respect to any Trust created thereby, all notices required or permitted under the terms and provisions of this Basic Agreement or such Trust Supplement shall be in English and in writing, and any such notice may be given by U.S. mail, courier service or facsimile or any other customary means of communication, and any such notice shall be effective when delivered (or, if mailed, three Business Days after deposit, postage prepaid, in the first class U.S. mail and, 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 the transmission was received), if to the Company, to: Delta Air Lines, Inc. 1030 Delta Boulevard Atlanta, Georgia 30320 Attention: Director - Corporate Finance, Dept. 856 Telephone: (404) 715-6707 53 Facsimile: (404) 715-4862 with a copy to: Delta Air Lines, Inc. 1030 Delta Boulevard Atlanta, Georgia 30320 Attn: General Counsel, Dept. 971 Telephone: (404) 715-2387 Facsimile: (404) 715-1657 if to the Trustee, to: State Street Bank and Trust Company of Connecticut, National Association 225 Asylum Street, Goodwin Square Hartford, Connecticut 06103 Attention: Corporate Trust Division Telephone: (860) 244-1844 Facsimile: (860) 244-1881 (b) The Company or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications. (c) Any notice or communication to Certificateholders of any series shall be mailed by first-class mail to the addresses for Certificateholders of such series shown on the Register kept by the Registrar and to addresses filed with the Trustee for Certificate Owners of such series. Failure so to mail a notice or communication or any defect in such notice or communication shall not affect its sufficiency with respect to other Certificateholders or Certificate Owners of such series. (d) If a notice or communication is mailed in the manner provided above, it is conclusively presumed to have been duly given, whether or not the addressee receives it. (e) If the Company mails a notice or communication to the Certificateholders of such series, it shall mail a copy to the Trustee and to each Paying Agent for such series at the same time. (f) The Trustee shall promptly furnish the Company with a copy of any demand, notice or written communication received by the Trustee hereunder from any Certificateholder, Certificate Owner, Owner Trustee, Loan Trustee, Liquidity Provider or Subordination Agent. (g) Whenever the words "notice" or "notify" or similar words are used herein, they shall have the same meaning ascribed to these terms as set forth in this Section 12.04. 54 Section 12.05. Governing Law. THIS BASIC AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND THIS BASIC AGREEMENT, TOGETHER WITH ALL TRUST SUPPLEMENTS AND CERTIFICATES, 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 AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 12.06. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 12.07. Trust Indenture Act Controls. This Agreement is subject to the provisions of the Trust Indenture Act and if any provision of this Agreement limits, qualifies or conflicts with another provision which is required to be included in this Agreement by the Trust Indenture Act, the required provision shall control. If any provision of this Agreement modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Agreement as so modified, or to be excluded, as the case may be, whether or not such provision of this Agreement refers expressly to such provision of the Trust Indenture Act. Section 12.08. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 12.09. Successors and Assigns. All covenants, agreements, representations and warranties in this Agreement by the Trustee and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. Any request, notice, direction, consent, waiver or other instrument or action by any Certificateholder shall bind the successors and assigns of such Certificateholder. Section 12.10. Benefits of Agreement. Nothing in this Agreement or in the Certificates of any series, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Certificateholders of each series, any benefit or any legal or equitable right, remedy or claim under this Agreement, except as provided expressly herein. Section 12.11. Legal Holidays. In any case where any Regular Distribution Date or Special Distribution Date relating to any Certificate of any series is not a Business Day with respect to such series, then (notwithstanding any other provision of this Agreement) payment need not be made on such date, but may be made on the next succeeding Business Day with the 55 same force and effect as if made on such Regular Distribution Date or Special Distribution Date, and no interest shall accrue during the intervening period. Section 12.12. Counterparts. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 12.13. Communication by Certificateholders with Other Certificateholders. Certificateholders of any series may communicate with other Certificateholders of such series with respect to their rights under this Basic Agreement, the related Trust Supplement or the Certificates of such series pursuant to Section 312(b) of the Trust Indenture Act. The Company, the Trustee and any and all other persons benefited by this Agreement shall have the protection afforded by Section 312(c) of the Trust Indenture Act. Section 12.14. Normal Commercial Relations. Anything contained in this Agreement to the contrary notwithstanding, the Trustee and any Certificateholder, or any bank or other affiliate of any such party, may conduct any banking or other financial transactions, and have banking or other commercial relationships, with the Company fully to the same extent as if this Agreement were not in effect, including without limitation the making of loans or other extensions of credit to the Company for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. Section 12.15. No Recourse Against Others. No past, present or future director, officer, employee, agent, member, manager, trustee or stockholder, as such, of the Company or any successor Person shall have any liability for any obligations of the Company or any successor Person, either directly or through the Company or any successor Person, under the Certificates or this Agreement or for any claim based on, in respect of or by reason of such obligations or their creation, whether by virtue of any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise. By accepting a Certificate, each Certificateholder agrees to the provisions of this Section 12.15 and waives and releases all such liability. Such waiver and release shall be part of the consideration for the issue of the Certificates. 56 IN WITNESS WHEREOF, the parties have caused this Pass Through Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first written above. DELTA AIR LINES, INC. By: _____________________________________ Name: Joan Repetti Title: Director - Corporate Finance STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, Trustee By: _____________________________________ Name: Title: 57 EXHIBIT A TO PASS THROUGH TRUST AGREEMENT FORM OF CERTIFICATE *Unless this Certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent for registration of transfer, exchange or payment, and any Certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. DELTA AIR LINES, INC. PASS THROUGH TRUST [ ] __% DELTA AIR LINES PASS THROUGH CERTIFICATE, SERIES [ ] Final Regular Distribution Date: [ ], evidencing a fractional undivided interest in a Trust, the property of which includes or will include, among other things, certain Equipment Notes each secured by certain Aircraft owned by or leased to Delta Air Lines, Inc. Certificate No. [ ] $[ ] Fractional Undivided Interest representing 0. _________% of the Trust per $1,000 face amount THIS CERTIFIES THAT [ ], for value received, is the registered owner of a $[ ] ([ ] dollars) Fractional Undivided Interest in the Delta Air Lines Pass Through Trust, Series [ ] (the "Trust") created by ______________________, as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement dated as of November 16, 2000 (the "Basic Agreement"), as supplemented by Trust Supplement No. [ ] thereto dated [ ], [ ] (collectively, the "Agreement"), between the Trustee and Delta Air Lines, Inc., a corporation incorporated under Delaware law (the "Company"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "[ ]% Delta Air Lines Pass Through Certificates, Series [ ]" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement. By virtue of its acceptance hereof, the Certificateholder of this Certificate assents to and agrees to be bound by the provisions of the Agreement and any related - ------------------ * This legend to appear on Book-Entry Certificates to be deposited with The Depository Trust Company. A-1 Intercreditor Agreement. The property of the Trust includes or will include certain Equipment Notes and all rights of the Trust and the Trustee, on behalf of the Trust, to receive any payments under any Intercreditor Agreement or Liquidity Facility (the "Trust Property"). Each issue of the Equipment Notes is or will be secured by, among other things, a security interest in certain Aircraft leased to or owned by the Company. The Certificates represent fractional undivided interests in the Trust and the Trust Property, and, except as may be specified in any Intercreditor Agreement or in the applicable Trust Supplement, will have no rights, benefits or interest in respect of any other separate trust established pursuant to the terms of the Basic Agreement for any other series of certificates issued pursuant thereto. Subject to and in accordance with the terms of the Agreement and any related Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each ____________ and _______________ (a "Regular Distribution Date"), commencing on ___________, ____, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date or such other date as shall be specified for such series in the applicable Trust Supplement, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement and any related Intercreditor Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date or such other date as shall be specified for such series in the applicable Trust Supplement, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day with the same force and effect as if made on such Regular Distribution Date or Special Distribution Date and no interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon, except that with respect to Certificates registered on the Record Date in the name of a Clearing Agency (or its nominee), such distributions shall be made by wire transfer. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. A-2 The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company, the Trustee, the Loan Trustee, any Owner Trustee or any Owner Participant or any Affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property for any payment or distribution due to such Certificateholder pursuant to the terms of the Agreement and that it will not have any recourse to the Company, the Trustee, the Loan Trustees, any Owner Trustee or any Owner Participant except as otherwise expressly provided in the Agreement, in any Note Document or in the Intercreditor Agreement. This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. The Certificates are issuable only as registered Certificates without coupons in minimum denominations of $1,000 Fractional Undivided Interest and integral multiples thereof except that one Certificate may be issued in a different denomination. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. A-3 No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Company, the Trustee, the Registrar, and any Paying Agent shall deem and treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Company, the Trustee, the Registrar or any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. THIS CERTIFICATE AND THE AGREEMENT 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 AND CERTIFICATEHOLDERS HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. A-4 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. DELTA AIR LINES, INC. PASS THROUGH TRUST By: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION as Trustee By: ________________________________________ Title: Dated: [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Certificates referred to in the within-mentioned Agreement. By: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION as Trustee By: ________________________________________ Authorized Officer A-5 EX-4.2 4 g83137exv4w2.txt TRUST SUPPLEMENT NO. 2003-1G EXHIBIT 4.2 TRUST SUPPLEMENT NO. 2003-1G Dated as of January 30, 2003 between DELTA AIR LINES, INC. and U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee, To PASS THROUGH TRUST AGREEMENT Dated as of November 16, 2000 Delta Air Lines Pass Through Trust 2003-1G Delta Air Lines Pass Through Certificates, Series 2003-1G TRUST SUPPLEMENT NO. 2003-1G This TRUST SUPPLEMENT NO. 2003-1G, dated as of January 30, 2003 (the "Trust Supplement"), between DELTA AIR LINES, INC., a Delaware corporation (the "Company" or "Delta"), and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, as successor trustee (the "Trustee") under the Pass Through Trust Agreement, dated as of November 16, 2000, between the Company and State Street Bank and Trust Company of Connecticut, National Association (the "Basic Agreement"). WITNESSETH: WHEREAS, the Basic Agreement, which is unlimited as to the aggregate face amount of Certificates that may be issued and authenticated thereunder, has heretofore or concurrently herewith been executed and delivered; WHEREAS, Delta is the owner of the 12 aircraft described in Schedule II (the "Aircraft"); WHEREAS, pursuant to each Indenture, Delta will issue on a recourse basis three series of Equipment Notes secured by the related Aircraft; WHEREAS, the Trustee shall hereby declare the creation of the Class G Trust (as defined below) for the benefit of Holders of the Class G Certificates (as defined below) to be issued in respect of such Class G Trust, and the initial Holders of the Class G Certificates, as grantors of such Class G Trust, by their respective acceptances of the Class G Certificates, shall join in the creation of the Class G Trust with the Trustee; WHEREAS, all Certificates to be issued by the Class G Trust will evidence Fractional Undivided Interests in the Class G Trust and will have no rights, benefits or interests in respect of any other separate Trust or the property held therein; WHEREAS, pursuant to the terms and conditions of the Basic Agreement, as supplemented by this Trust Supplement and the Participation Agreements, the Trustee on behalf of the Class G Trust shall purchase the Equipment Notes issued by the Company pursuant to the Indentures having the identical interest rate as, and final maturity dates not later than the final Regular Distribution Date of, the Class G Certificates issued hereunder and shall hold such Equipment Notes in trust for the benefit of the Class G Certificateholders; WHEREAS, pursuant to the terms and conditions of the Intercreditor Agreement referred to in Section 3.01(h) hereof (the "Intercreditor Agreement"), the Trustee and the other parties thereto will agree to the terms of subordination set forth therein; WHEREAS, all of the conditions and requirements necessary to make this Trust Supplement, when duly executed and delivered, a valid, binding and legal instrument in accordance with its terms and for the purposes herein expressed, have been done, performed and fulfilled, and the execution and delivery of this Trust Supplement in the form and with the terms hereof have been in all respects duly authorized; WHEREAS, upon the occurrence of a Registration Event, the Basic Agreement, as supplemented by this Trust Supplement, shall become subject to the provisions of the Trust Indenture Act and shall, to the extent applicable, be governed by such provisions; NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. Unless otherwise specified herein or the context otherwise requires, capitalized terms used but not defined herein shall have the respective meanings set forth, and shall be construed and interpreted in the manner described, in the Basic Agreement or, to the extent not defined therein, in the Intercreditor Agreement referred to herein, the Indentures, the Registration Rights Agreement or the Reference Agency Agreement. As used herein, the term "Agreement" shall mean the Basic Agreement, as supplemented by this Trust Supplement. Section 1.02 Amended Definitions. For purposes of the Class G Trust, the definitions of the following capitalized terms as specified heretofore in Section 1.01 of the Basic Agreement shall be amended to read as follows: "Pool Balance": means, with respect to the Class G Certificates as of any date, (i) the original aggregate face amount of the Class G Certificates less (ii) the aggregate amount of all distributions made in respect of the Class G Certificates other than distributions made in respect of interest, Break Amount or Make-Whole Amount or reimbursement of any costs or expenses incurred in connection therewith. The Pool Balance as of any Regular Distribution Date or Special Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Series G Equipment Notes or other Trust Property held in the Class G Trust and the distribution thereof to be made on such date and payments under the Policy made for the benefit of the Class G Certificateholders (other than in respect of the Primary Liquidity Facility and interest on the Class G Certificates)." "Trust Property": means, with respect to the Class G Trust, (i) subject to the Intercreditor Agreement, the Series G Equipment Notes held as the property of the Class G Trust, all monies at any time paid thereon and all monies due and to become due thereunder, (ii) funds from time to time deposited in the Certificate Account and the Special Payments Account, each for the Class G Trust, and, subject to the Intercreditor Agreement, any proceeds from the sale by the Trustee pursuant to Article VI of the Basic Agreement of any Series G Equipment Note referred to in (i) above, (iii) all rights of the Class G Trust and the Trustee, on behalf of the Class G Trust, under the Primary Liquidity Facility or Above-Cap Liquidity Facility (collectively, the "Liquidity Facilities") or the Intercreditor Agreement, including, without limitation, all rights to receive all monies and other property payable thereunder, (iv) all monies or other property receivable under the Intercreditor Agreement and the Liquidity 2 Facilities and (v) all monies or other property payable to the Trustee on behalf of the Class G Trust pursuant to the Policy." ARTICLE II DECLARATION OF TRUST Section 2.01 Declaration of Trust. The Trustee hereby declares the creation of a Trust, designated the "Delta Air Lines Pass Through Trust 2003-1G" (the "Class G Trust"), for the benefit of the Holders of the Class G Certificates to be issued in respect of such Class G Trust, and the initial Holders of the Class G Certificates, as grantors of such Class G Trust, by their respective acceptances of the Class G Certificates, join in the creation of such Class G Trust with the Trustee. The Trustee, by the execution and delivery of this Trust Supplement, acknowledges its acceptance of all right, title and interest in and to the Trust Property to be acquired pursuant to Section 2.02 of the Basic Agreement and the Participation Agreements and the Trustee will hold such right, title and interest for the benefit of all present and future Holders of the Class G Certificates, upon the trusts set forth in the Basic Agreement and this Trust Supplement. ARTICLE III THE CERTIFICATES Section 3.01 The Certificates. There is hereby created a series of Certificates to be issued under this Agreement designated as "Delta Air Lines Pass Through Certificates, Series 2003-1G" (the "Initial Certificates"). The exchange certificates which may be issued and offered in exchange for the Initial Certificates pursuant to the Registration Rights Agreement shall be known as the "Delta Air Lines Exchange Pass Through Certificates, Series 2003-1G" (the "Exchange Certificates"). The Initial Certificates and the Exchange Certificates are hereinafter defined as the "Class G Certificates". Each Class G Certificate represents a Fractional Undivided Interest in the Class G Trust created hereby. The Class G Certificates shall be the only instruments evidencing a Fractional Undivided Interest in the Class G Trust. The terms and conditions applicable to the Class G Certificates and the Class G Trust are as follows: (a) The aggregate face amount of the Class G Certificates that may be authenticated and delivered under this Agreement (except for Class G Certificates authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Class G Certificates pursuant to Sections 3.03, 3.04, 3.05 and 3.06 of the Basic Agreement) is $391,583,000. (b) The Cut-off Date is February 28, 2003. (c) The Regular Distribution Dates with respect to any payment of Scheduled Payments means January 25, April 25, July 25 and October 25 of each year, commencing 3 on April 25, 2003, until payment of all of the Scheduled Payments to be made under the Equipment Notes has been made. The principal amount of the Equipment Notes to be held by the Class G Trust is scheduled for payment on January 25, April 25, July 25 and October 25 in certain years, commencing on April 25, 2003 and ending on January 25, 2008 as set out in Schedules I-A and I-B. Notwithstanding the provisions of Section 12.11 of the Basic Agreement, if a Regular Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day and interest shall accrue during the intervening period. (d) The Special Distribution Dates with respect to the Class G Certificates means any Business Day on which a Special Payment is to be distributed pursuant to this Agreement. (e) The Class G Certificates shall be in the form attached hereto as Exhibit A, shall be Book-Entry Certificates (subject to Section 4.01(d) of this Trust Supplement), and shall be subject to the conditions set forth in the Letter of Representations between the Company and The Depository Trust Company and any successor agency thereto ("DTC"), as initial Clearing Agency, attached hereto as Exhibit D. (f) The proceeds of the Class G Certificates issued by the Class G Trust shall be used to acquire the Equipment Notes described in Schedule II, which Equipment Notes relate to the Aircraft described in Schedule II and the Note Documents described in Schedule III. (g) Any Person acquiring or accepting a Class G Certificate or an interest therein will, by such acquisition or acceptance, be deemed to represent and warrant to the Company, the Loan Trustees and the Trustee that either (i) no assets of a Plan or any trust established with respect to a Plan, have been used to purchase Class G Certificates or an interest therein or (ii) the purchase and holding of Class G Certificates or interests therein by such Person is exempt from the prohibited transaction restrictions of ERISA and the Code or materially similar provisions of Similar Law pursuant to one or more prohibited transaction statutory or administrative exemptions. "Plan" means a retirement plan or other employee benefit plan or arrangement, including for this purpose an individual retirement account, annuity or Keogh plan, that is subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of the Internal Revenue Code of 1986 (the "Code"), or such a plan or arrangement which is a foreign, church or governmental plan or arrangement exempt from Title I of ERISA and Section 4975 of the Code but subject to a foreign, federal, state, or local law which is substantially similar to the provisions of Title I of ERISA or Section 4975 of the Code (each, a "Similar Law"). (h) The Class G Certificates will be subject to the following Intercreditor Agreement (and to the extent the terms thereof (including the definitions of defined terms) are inconsistent with the terms of this Agreement, such Intercreditor Agreement shall control): that certain Intercreditor Agreement, dated as of the date hereof, among U.S. Bank Trust National Association, as Trustee under each Trust (as defined therein), 4 Ambac Assurance Corporation, as the Policy Provider, Landesbank Baden-Wurttemberg, as the Primary Liquidity Provider, Merrill Lynch Capital Services, Inc., as the Above-Cap Liquidity Provider, and U.S. Bank Trust National Association, as Subordination Agent thereunder. Potential Purchasers shall have the rights upon the occurrence of a Triggering Event set forth in Article VII hereof. The Trustee and, by acceptance of any Class G Certificate, each Certificateholder thereof, agrees to be bound by all of the provisions of the Intercreditor Agreement, including the subordination provisions of Section 9.09 thereof. (i) The Class G Certificates will have the benefit of the following Primary Liquidity Facility: that certain Revolving Credit Agreement, dated as of the date hereof, between U.S. Bank Trust National Association, as Subordination Agent under the Intercreditor Agreement, as agent and trustee for the Class G Trust, and the Primary Liquidity Provider. (j) The Class G Certificates will have the benefit of the following Above-Cap Liquidity Facility: that certain ISDA Master Agreement, dated as of the date hereof, between the Subordination Agent, as agent of the Trustee, and the Above-Cap Liquidity Provider, together with the schedule and confirmation thereto relating to the Class G Certificates. (k) Payments of interest on the Class G Certificates when due and payment of the outstanding balance on the Class G Certificates on the Final Legal Distribution Date for the Class G Certificates and under certain other circumstances will be supported by a certificate guaranty insurance policy to be issued by the Policy Provider under the Policy Provider Agreement, such policy, together with any policy issued in replacement thereof pursuant to the Intercreditor Agreement, in each case as amended, supplemented or otherwise modified from time to time in accordance with their respective terms, being the "Policy." (l) Subject to Section 2.02(b) of the Basic Agreement, there will not be any deposit agreement, escrow agreement or other similar arrangement prior to delivery of the Aircraft. (m) The Responsible Party is the Company. Section 3.02 Delivery of Documents. The Trustee is hereby directed (i) to execute and deliver the Intercreditor Agreement, the Policy Provider Agreement and each Participation Agreement, each in the form delivered to the Trustee by the Company and (ii) subject to the respective terms thereof, to perform its obligations thereunder. Section 3.03 Policy Provider Agreement. For purposes of this Trust Supplement, the representations and warranties of the Trustee set forth in Section 7.15(b), (c), (d) and (e) of the Basic Agreement shall be amended by adding the phrase "the Policy Provider Agreement" after each reference to "Intercreditor Agreement" therein. 5 ARTICLE IV ISSUANCE AND TRANSFER OF THE CLASS G CERTIFICATES Section 4.01 Issuance of Class G Certificates. (a) The Initial Certificates will be issued in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof. The Exchange Certificates will be issued in denominations of $1,000 and integral multiples thereof. Each Exchange Certificate shall be dated the date of its authentication. (b) Initial Certificates offered and sold in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), or any successor regulation thereto ("Rule 144A") shall be issued initially in the form of a single global Certificate in definitive, fully registered form without interest coupons, substantially in the form set forth as Exhibit A hereto (the "Restricted Global Certificate"), duly executed and authenticated by the Trustee as hereinafter provided. The Restricted Global Certificate will be registered in the name of a nominee for DTC for credit to the account of members of, or participants in, DTC ("DTC Participants") or to the account of indirect participants that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly ("Indirect Participants") and deposited with the Trustee, as custodian for DTC. The aggregate principal amount of the Restricted Global Certificate may from time to time be increased or decreased by adjustments made on the records of DTC or its nominee, or of the Trustee, as custodian for DTC or its nominee, as hereinafter provided. (c) Initial Certificates offered and sold in offshore transactions in reliance on Regulation S under the Securities Act or any successor regulation thereto ("Regulation S") shall be issued initially in the form of a single global Certificate in definitive, fully registered form without interest coupons, substantially in the form set forth as Exhibit A hereto (the "Regulation S Global Certificate") duly executed and authenticated by the Trustee as hereinafter provided. The Regulation S Global Certificate will be registered in the name of a nominee for DTC for credit to the accounts of Euroclear Bank S.A./N.V. ("Euroclear") or Clearstream Banking, societe anonyme ("Clearstream") and deposited with the Trustee as custodian for DTC. At any time prior to the 40th day after the later of the commencement of the offering of the Initial Certificates and the date of the initial issuance (the "Issuance Date") of the Initial Certificates (the "Distribution Compliance Expiration Date") beneficial interest in the Regulation S Global Certificates representing the Initial Certificates may be held only through Euroclear or Clearstream. The aggregate principal amount of the Regulation S Global Certificate may from time to time be increased or decreased by adjustments made on the records of DTC or its nominee, or of the Trustee, as custodian for DTC or its nominee, as hereinafter provided. The Restricted Global Certificate and the Regulation S Global Certificate are sometimes referred to as the "Global Certificates". (d) The initial Class G Certificates and all other Initial Certificates offered and sold to an institutional investor that is an "accredited investor" within the meaning set forth in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act ("Institutional Accredited Investor") shall be issued in the form of permanent certificated Certificates in registered form in substantially the form set forth as Exhibit A hereto (the "U.S. Definitive Certificates"). The Class G Certificates issued pursuant to Section 4.05(b) in exchange for interest in the Regulation 6 S Global Certificates shall be issued in the form of permanent certificated Certificates in registered form in substantially the form set forth as Exhibit A hereto (the "Regulation S Definitive Certificates"). The Regulation S Definitive Certificates and the U.S. Definitive Certificates are sometimes collectively herein referred to as the "Definitive Initial Certificates". (e) The Definitive Initial Certificates shall be in fully registered form and shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner, all as determined by the officers executing such Definitive Initial Certificates, as evidenced by their execution of such Definitive Initial Certificates. (f) The Exchange Certificates shall be issued in the form of one or more global Certificates substantially in the form of Exhibit A hereto (each, a "Global Exchange Certificate"), except that (i) the Restricted Legend (hereinafter defined) shall be omitted and (ii) such Exchange Certificates shall contain such appropriate insertions, omissions, substitutions and other variations from the form set forth in Exhibit A hereto relating to the nature of the Exchange Certificates as the Responsible Officer of the Trustee executing such Exchange Certificates on behalf of the Trust may determine, as evidenced by such officer's execution on behalf of the Trust of such Exchange Certificates. Such Global Exchange Certificates shall be in registered form and be registered in the name of a nominee for DTC and deposited with the Trustee, at its Corporate Trust Office, as custodian for DTC. The aggregate principal amount of any Global Exchange Certificate may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC for such Global Exchange Certificate, which adjustments shall be conclusive as to the aggregate principal amount of any such Global Exchange Certificate. Section 4.02 Restrictive Legends. (a) Subject to Section 4.03, unless and until (i) an Initial Certificate is sold under an effective Shelf Registration Statement or (ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to an effective Exchange Offer Registration Statement, in each case as provided for in the Registration Rights Agreement, each Global Certificate (other than the Regulation S Global Certificate after the Distribution Compliance Expiration Date) and each U.S. Definitive Certificate shall bear a legend to the following effect (the "Restricted Legend") on the face thereof, unless the Company and the Trustee determine otherwise consistent with applicable law: THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS 7 CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE, THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3) AGREES THAT PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), IT WILL FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND IF REQUESTED, DELTA AIR LINES, INC., SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT 8 SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE CERTIFICATES PURSUANT TO CLAUSE 2(E) ABOVE OR UPON ANY TRANSFER OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS. (b) Each Global Certificate and the Global Exchange Certificate shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. (c) Each Class G Certificate shall bear the following legend on the face thereof: BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT EITHER (A) NO ASSETS OF A PLAN OR ANY TRUST ESTABLISHED WITH RESPECT TO A PLAN HAVE BEEN USED TO ACQUIRE THIS CERTIFICATE OR AN INTEREST HEREIN OR (B) THE PURCHASE AND HOLDING OF THIS CERTIFICATE OR INTEREST HEREIN BY SUCH A PERSON ARE EXEMPT FROM THE PROHIBITED TRANSACTION RESTRICTIONS OF ERISA AND THE CODE OR MATERIALLY SIMILAR PROVISIONS OF SIMILAR LAW PURSUANT TO ONE OR MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS. CERTAIN TERMS USED IN THIS PARAGRAPH SHALL HAVE THE MEANINGS SPECIFIED IN THE AGREEMENT. Section 4.03 Book-Entry Provisions for Restricted Global Certificates and Regulation S Global Certificates. (a) DTC Participants shall have no rights under this Agreement with respect to any Global Certificate held on their behalf by DTC, or the Trustee as 9 its custodian, and DTC may be treated by the Trustee and any agent of the Trustee as the absolute owner of such Global Certificate for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any agent of the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or shall impair, as between DTC and its DTC Participants, the operation of customary practices governing the exercise of the rights of a holder of any Class G Certificate. Upon the issuance of any Global Certificate, the Registrar or its duly appointed agent shall record a nominee of DTC as the registered holder of such Global Certificate. (b) Transfers of any Global Certificate shall be limited to transfers of such Global Certificate in whole, but not in part, to nominees of DTC, its successor or such successor's nominees. Beneficial interests in the Restricted Global Certificate and the Regulation S Global Certificate may be transferred in accordance with the rules and procedures of DTC and the provisions of Section 4.04. Beneficial interests in the Restricted Global Certificate or a Regulation S Global Certificate shall be delivered to all beneficial owners thereof in the form of U.S. Definitive Certificates or Regulation S Definitive Certificates, as the case may be, if (i) DTC notifies the Trustee in writing that it is no longer willing or able to discharge properly its responsibilities as depositary for the Restricted Global Certificates or the Regulation S Global Certificate, as the case may be, and a successor depositary is not appointed by the Trustee within 90 days of such notice, (ii) the Company, at its option, advises the Trustee in writing that it elects to terminate the book-entry system through DTC or (iii) after the occurrence and during the continuance of an Event of Default, Class G Certificateholders with Fractional Undivided Interests aggregating not less than a majority in interest in the Class G Trust advise the Trustee, the Company and DTC through DTC Participants in writing that the continuation of a book-entry system through DTC (or a successor thereto) is no longer in the Class G Certificateholders' best interests. Neither the Company nor the Trustee shall be liable if the Company or the Trustee is unable to locate a qualified successor clearing system. (c) Any beneficial interest in one of the Global Certificates that is transferred to a Person who takes delivery in the form of an interest in the other Global Certificate will, upon such transfer, cease to be an interest in such Global Certificate and become an interest in the other Global Certificate and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Certificate for as long as it remains such an interest. (d) In connection with the transfer of the entire amount of the Restricted Global Certificate or Regulation S Global Certificate to the beneficial owners thereof pursuant to paragraph (b) of this Section 4.03, such Restricted Global Certificate or Regulation S Global Certificate, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Trustee shall execute, authenticate and deliver, to each beneficial owner identified by DTC in exchange for its beneficial interest in such Restricted Global Certificate or Regulation S Global Certificate, as the case may be, an equal aggregate principal amount of U.S. Definitive Certificates or Regulation S Definitive Certificates, as the case may be, of authorized denominations. None of the Company, the Registrar, the Paying Agent nor the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such registration instructions. Upon the issuance of Definitive Initial 10 Certificates, the Trustee shall recognize the Person in whose name the Definitive Initial Certificates are registered in the Register as Certificateholders hereunder. (e) Any Definitive Initial Certificate delivered in exchange for an interest in the Restricted Global Certificate or the Regulation S Global Certificate, as the case may be, pursuant to paragraph (b) of this Section 4.03 shall, except as otherwise provided by paragraph (f) of Section 4.04, bear the Restricted Legend. (f) The registered holder of the Restricted Global Certificate or the Regulation S Global Certificate may grant proxies and otherwise authorize any Person, including DTC Participants and Persons that may hold interests through DTC Participants, to take any action which a Holder is entitled to take under this Agreement or the Class G Certificates. Section 4.04 Special Transfer Provisions. Unless and until (i) an Initial Certificate is sold under an effective Shelf Registration Statement, or (ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to an effective Exchange Offer Registration Statement, in each case pursuant to the Registration Rights Agreement, the following provisions shall apply to such Initial Certificates: (a) Transfers to Non-QIB Institutional Accredited Investors. The following provisions shall apply with respect to the registration of any proposed transfer of a Class G Certificate to any Institutional Accredited Investor which is not a qualified institutional buyer ("QIB"), as defined in Rule 144A (excluding transfers to or by Persons who are not "U.S. Persons," as defined in Regulation S, such Person being referred to as "Non-U.S. Persons"): (i) The Registrar shall register the transfer of any Class G Certificate, whether or not such Class G Certificate bears the Restricted Legend, if (x) the requested transfer is after the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision) or (y) the proposed transferee furnishes to the Trustee a signed letter of representations and agreements relating to the restrictions on transfer of the Certificates, substantially in the form of Exhibit C hereto, and the aggregate principal amount of the Class G Certificates being transferred is at least $100,000. (ii) If the proposed transferor is a DTC Participant holding a beneficial interest in the Restricted Global Certificate, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of the transfer and a decrease in the principal amount of such Restricted Global Certificate in an amount equal to the principal amount of the beneficial interest in such Restricted Global Certificate to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver to the transferor or at its direction, one or more U.S. Definitive Certificates of like tenor and amount. (b) Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of an Initial Certificate to a QIB (excluding Non-U.S. Persons): 11 (i) If the Initial Certificate to be transferred consists of U.S. Definitive Certificates or an interest in a Regulation S Global Certificate prior to the Distribution Compliance Date, the Registrar shall register the transfer, if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Initial Certificate stating, or has otherwise advised the Trustee and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Initial Certificate stating, or has otherwise advised the Trustee and the Registrar in writing, that it is purchasing the Initial Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it, or the Person on whose behalf it is acting with respect to any such account, is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Trust and/or the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (ii) If the proposed transferee is a DTC Participant and the Initial Certificate to be transferred consists of U.S. Definitive Certificates, upon receipt by the Registrar of the documents referred to in clause (i) above and instructions given in accordance with DTC's and the Registrar's procedures therefor, the Registrar shall reflect on its books and records the date of such transfer and an increase in the principal amount of the Restricted Global Certificate in an amount equal to the principal amount of the U.S. Definitive Certificates being transferred, and the Trustee shall cancel such U.S. Definitive Certificates so transferred. (c) Transfers of Interests in the Regulation S Global Certificate or Regulation S Definitive Certificates. The Registrar shall register any transfer of interests in the Regulation S Global Certificate or Regulation S Definitive Certificates any time after the Distribution Compliance Expiration Date without requiring any additional certification. (d) Transfers to Non-U.S. Persons at any Time. The following provisions shall apply with respect to any registration of any transfer of an Initial Certificate to a Non-U.S. Person: (i) The Registrar shall register any proposed transfer to any Non-U.S. Person if the Initial Certificate to be transferred is a U.S. Definitive Certificate or an interest in the Restricted Global Certificate, upon receipt of a certificate substantially in the form of Exhibit B from the proposed transferor. The Registrar shall promptly send a copy of such certificate to the Company. (ii) (A) If the proposed transferor is a DTC Participant holding a beneficial interest in a Restricted Global Certificate, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) and (y) instructions in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date of such transfer and a decrease in the principal amount of such Restricted Global Certificate in an amount equal to the principal amount of the beneficial interest in such 12 Restricted Global Certificate to be transferred, and (B) if the proposed transferee is a DTC Participant, upon receipt by the Registrar of instructions given in accordance with DTC's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Regulation S Global Certificate in an amount equal to the principal amount of the U.S. Definitive Certificate or the Restricted Global Certificate, as the case may be, to be transferred, and the Trustee shall cancel the U.S. Definitive Certificate, if any, so transferred or decrease the amount of such Restricted Global Certificate. (e) Restricted Legend. Upon the transfer, exchange or replacement of Class G Certificates not bearing the Restricted Legend, the Registrar shall deliver Class G Certificates that do not bear the Restricted Legend. Upon the transfer, exchange or replacement of Class G Certificates bearing the Restricted Legend, the Registrar shall deliver only Class G Certificates that bear the Restricted Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x) of this Section 4.04 exist or (ii) there is delivered to the Registrar an Opinion of Counsel to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (f) General. By its acceptance of any Class G Certificate bearing the Restricted Legend, each Holder of such a Class G Certificate acknowledges the restrictions on transfer of such Class G Certificate set forth in this Trust Supplement and agrees that it will transfer such Class G Certificate only as provided in this Trust Supplement. The Registrar shall not register a transfer of any Class G Certificate unless such transfer complies with the restrictions on transfer of such Class G Certificate set forth in this Trust Supplement. In connection with any transfer of Class G Certificates, each Class G Certificateholder agrees by its acceptance of the Class G Certificates to furnish the Registrar or the Trustee such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act and in accordance with the terms and provisions of this Article IV; provided that the Registrar shall not be required to determine the sufficiency of any such certifications, legal opinions or other information. Until such time as no Class G Certificates remain Outstanding, the Registrar shall retain copies of all letters, notices and other written communications received pursuant to this Section 4.04. The Trustee, if not the Registrar at such time, shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. ARTICLE V [RESERVED] 13 ARTICLE VI DISTRIBUTION; STATEMENTS TO CERTIFICATEHOLDER Section 6.01 Statements to Certificateholders. (a) On each Regular Distribution Date and Special Distribution Date, the Trustee will include with each distribution to the Class G Certificateholders a statement, giving effect to the distribution to be made on such Regular Distribution Date or Special Distribution Date, and, except to the extent otherwise provided in the applicable Trust Supplement, setting forth the following information (per $1,000 aggregate face amount of Class G Certificates as to (ii) and (iii) below): (i) the aggregate amount of funds distributed on such Distribution Date, indicating the amount allocable to each source (including any portion thereof paid by any Liquidity Provider and/or the Policy Provider); (ii) the amount of such distribution allocable to principal and the amount allocable to Break Amount (if any) and Make-Whole Amount (if any); (iii) the amount of such distribution allocable to interest; (iv) the Pool Balance and the Pool Factor; and (v) the LIBOR rates (as determined by the Reference Agent) and the resulting interest rates payable on the Class G Certificates for the current and immediately preceding Interest Periods. With respect to the Class G Certificates registered in the name of DTC or its nominee, on the Record Date prior to each Regular Distribution Date and Special Distribution Date, the Trustee will request from the Clearing Agency a securities position listing setting forth the names of all the DTC Participants reflected on DTC's books as holding interests in the Class G Certificates on such Record Date. On each Regular Distribution Date and Special Distribution Date, the Trustee will mail to each such Direct Participant whose name has been provided by DTC the statement described above and will make available additional copies as requested by such DTC Participants for forwarding to holders of the Class G Certificates. (b) Within a reasonable period of time after the end of each calendar year but not later than the latest date permitted by law, the Trustee shall furnish to each Person who at any time during such calendar year was a Class G Certificateholder of record a statement containing the sum of the amounts determined pursuant to clauses (a)(i), (a)(ii) and (a)(iii) above for such calendar year or, in the event such Person was a Class G Certificateholder of record during a portion of such calendar year, for the applicable portion of such year, and such other items as are readily available to the Trustee and which a Class G Certificateholder may reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns or foreign income tax returns. With respect to Class G Certificates registered in the name of DTC or its nominee, such statement and such other items shall be prepared on the basis of information supplied to the Trustee by the DTC Participants and shall be delivered by the Trustee to such DTC Participants to be available for forwarding by such DTC Participants to the holders of interests in the Class G Certificates. 14 (c) The provisions of this Section 6.01 supersede and replace the provisions of Section 4.03 of the Basic Agreement in their entirety with respect to Class G Trust. ARTICLE VII DEFAULT Section 7.01 Purchase Rights of Certificateholders. (a) By acceptance of its Class G Certificate, each Class G Certificateholder agrees that at any time after the occurrence and during the continuation of a Triggering Event, (i) unless the Policy Provider has purchased or given notice of its election to purchase the Class G Certificates, each Class C Certificateholder (other than the Initial Class C Holder, the Company or any of its Affiliates) shall have the right to purchase all, but not less than all, of the Class G Certificates upon ten days' prior written notice to the Trustee and each other Class C Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class C Certificateholder (other than the Company or any of its Affiliates) notifies such purchasing Class C Certificateholder that such other Class C Certificateholder wants to participate in such purchase, then such other Class C Certificateholder may join with the purchasing Class C Certificateholder to purchase all, but not less than all, of the Class G Certificates pro rata based on the Fractional Undivided Interest in the Class C Trust held by each such Class C Certificateholder and (B) if prior to the end of such ten-day period any other Class C Certificateholder fails to notify the purchasing Class C Certificateholder of such other Class C Certificateholder's desire to participate in such a purchase, then such other Class C Certificateholder shall lose its right to purchase the Class G Certificates pursuant to this Section 7.01(a)(i); and (ii) unless the Policy Provider has purchased or given notice of its election to purchase the Class G Certificates, each Class D Certificateholder (other than the Initial Class D Holder, the Company or any of its Affiliates) shall have the right (which shall not expire upon any purchase of the Class G Certificates pursuant to clause (i) above) to purchase all, but not less than all, of the Class G Certificates and the Class C Certificates upon ten days' prior written notice to the Trustee, the Class C Trustee and each other Class D Certificateholder, provided that (A) if prior to the end of such ten-day period any other Class D Certificateholder (other than the Company or any of its Affiliates) notifies such purchasing Class D Certificateholder that such other Class D Certificateholder wants to participate in such purchase, then such other Class D Certificateholder may join with the purchasing Class D Certificateholder to purchase all, but not less than all, of the Class G Certificates and the Class C Certificates pro rata based on the Fractional Undivided Interest in the Class D Trust held by each such Class D Certificateholder and (B) if prior to the end of such ten-day period any other Class D Certificateholder fails to notify the purchasing Class D Certificateholder of such other Class D Certificateholder's desire to participate in such a purchase, then such other Class D Certificateholder shall lose its right to purchase the Class G Certificates and the Class C Certificates pursuant to this Section 7.01(a)(ii); and 15 (iii) whether or not any Class C or Class D Certificateholders have exercised their purchase rights pursuant to paragraphs (i) or (ii) above, the Policy Provider (except in the event of a Policy Provider Default), if it is then the Controlling Party, shall have the right to purchase all, but not less than all, of the Class G Certificates upon ten days' written notice to the Trustee and the holders of the Class G Certificates. The purchase price with respect to the Class G Certificates shall be equal to the Pool Balance of the Class G Certificates, together with accrued and unpaid interest in respect thereof to the date of such purchase, Break Amount (if any), and any other amounts then due and payable to the Class G Certificateholders under this Agreement, the Intercreditor Agreement, any Series G Equipment Note held as the property of the Class G Trust or the related Indenture and Participation Agreement or on or in respect of the Class G Certificates but without any Make-Whole Amount, provided, however, that if such purchase occurs after the Record Date relating to any Distribution Date, such purchase price shall be reduced by the amount to be distributed hereunder on such related Distribution Date (which deducted amounts shall remain distributable to, and may be retained by, the Class G Certificateholders as of such Record Date); provided further that no such purchase of Class G Certificates pursuant to this Section 7.01(a) shall be effective unless the purchaser(s) shall certify to the Trustee that contemporaneously with such purchase, such purchaser(s) is purchasing, pursuant to the terms of this Agreement, the Class C Trust Agreement, the Class D Trust Agreement and the Intercreditor Agreement, all of the Class G Certificates and the Class C Certificates that are senior to the securities held by such purchaser(s), subject to the purchase rights of the Policy Provider provided in Section 7.01(a)(iii) hereof. Each payment of the purchase price of the Class G Certificates referred to in the first sentence hereof shall be made to an account or accounts designated by the Trustee and each such purchase shall be subject to the terms of this Section 7.01(a). Each Class G Certificateholder agrees by its acceptance of its Certificate that it will, upon payment from such Class C Certificateholder(s), Class D Certificateholder(s) or the Policy Provider, as the case may be, of the purchase price set forth in the first sentence of this paragraph, forthwith sell, assign, transfer and convey to the purchaser(s) thereof (without recourse, representation or warranty of any kind except as to its own acts) all of the right, title, interest and obligation of such Class G Certificateholder in this Agreement, the Intercreditor Agreement, the Policy, the Policy Provider Agreement, each Liquidity Facility, the Note Documents and all Class G Certificates held by such Class G Certificateholder (excluding all right, title and interest under any of the foregoing to the extent such right, title or interest is with respect to an obligation not then due and payable as respects any action or inaction or state of affairs occurring prior to such sale) and the purchaser(s) shall assume all of such Class G Certificateholder's obligations under this Agreement, the Intercreditor Agreement, the Policy, the Policy Provider Agreement, each Liquidity Facility, the Note Documents and all such Class G Certificates. The Class G Certificates will be deemed to be purchased on the date payment of the purchase price is made notwithstanding the failure of any Class G Certificateholder to deliver any Class G Certificate and, upon such a purchase, (i) the only rights of the Class G Certificateholders will be to deliver the Class G Certificates and (ii) if the purchaser(s) shall so request, each such Class G Certificateholder will comply with all the provisions of Section 3.04 of the Basic Agreement and the applicable provisions of this Trust Supplement to enable new Class G Certificates to be issued to the purchaser(s) in such denominations as it shall request. All charges and expenses in connection with the issuance of any such new Class G Certificates shall be borne by the purchaser(s) thereof. 16 (b) This Section 7.01 supplements and, to the extent inconsistent with any provision of Section 6.01(a) of the Basic Agreement, replaces the provisions of Section 6.01(a) of the Basic Agreement. Notwithstanding anything to the contrary set forth herein or in any Operative Agreement, the provisions of this Section 7.01 may not be amended in any manner without the consent of each Class G Certificateholder, Class C Certificateholder or Class D Certificateholder (in each case, other than the Company or any of its Affiliates) that would be adversely affected thereby, or the Policy Provider, if it would be adversely affected thereby. ARTICLE VIII SUPPLEMENTAL AGREEMENTS Section 8.01 Supplemental Agreements. (a) For purposes of the Class G Trust only, the following provisions of the Basic Agreement shall be amended as provided below. (i) Section 7.09(b) of the Basic Agreement shall be amended by inserting the phrase "the Policy Provider," immediately after each reference to "the Company" therein. (ii) Section 9.01 of the Basic Agreement shall be amended by adding the phrase "but with, in the case of subparagraphs (2), (4), (5), (7) and (13) below, the consent of the Policy Provider" immediately after the phrase "Without the consent of any Certificateholders,". (iii) Section 9.01 of the Basic Agreement shall be amended by adding the phrase "the Policy, the Policy Provider Agreement, the Reference Agency Agreement," after each reference to "Intercreditor Agreement" therein (except for the second such reference in subparagraph (7) thereof). (iv) Section 9.02 of the Basic Agreement shall be amended by (A) adding the phrase "and upon the prior written consent of the Policy Provider" immediately after the phrase "by Direction of said Certificateholders delivered to the Company and the Trustee," appearing in the fifth line thereof and (B) by adding the phrase "the Policy Provider and" immediately after the phrase "provided, however, that no such agreement shall, without the consent of" appearing in the 13th line thereof. (v) Section 9.02 of the Basic Agreement shall be amended by (i) adding the phrase "the Policy, the Policy Provider Agreement, the Reference Agency Agreement," after each reference to "Intercreditor Agreement" therein (except for such reference in subparagraph (3) thereof) and (ii) adding the following as subparagraph (6) thereof: "(6) terminate or modify the Policy." (vi) Section 9.04 of the Basic Agreement shall be amended by inserting the phrase "(which opinion shall also be addressed to the Policy Provider)" immediately before the period at the end of such Section. 17 (vii) Section 10.01 of the Basic Agreement shall be amended by inserting at the beginning of the second sentence thereof the phrase "Subject to Section 8.01(b) of the Intercreditor Agreement (as defined in Trust Supplement No. 2003-1G dated as of January 30, 2003),". (b) The Trustee agrees to send to S&P (at its address at 55 Water Street, 39th Floor, New York, New York, 10041-0003, Attention: Philip A. Baggaley, or such other address as S&P may notify the Trustee) and the Policy Provider (at its address specified in the Intercreditor Agreement) a copy of each notice, statement, report or other written communication sent by the Trustee to each Class G Certificateholder. ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.01 Final Termination Date. The respective obligations and responsibilities of the Company and the Trustee created hereby and the Class G Trust created hereby shall terminate upon the distribution to all Class G Certificateholders and the Trustee of all amounts required to be distributed to them pursuant to this Agreement and the disposition of all property held as part of the Trust Property; provided, however, that in no event shall the Trust created hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, Sr., the father of John F. Kennedy, former President of the United States, living on the date of this Trust Supplement. Section 9.02 Basic Agreement Ratified. Except and so far as herein expressly provided, all of the provisions, terms and conditions of the Basic Agreement are in all respects ratified and confirmed; and the Basic Agreement and this Trust Supplement shall be taken, read and construed as one and the same instrument. Section 9.03 Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT AND THE CLASS G CERTIFICATES 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 AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 9.04 Counterparts. This Trust Supplement may be executed in any number of counterparts (and each of the parties shall not be required to execute the same counterpart). Each counterpart of this Trust Supplement including a signature page or pages executed by each of the parties hereto shall be an original counterpart of this Trust Supplement, but all of such counterparts together shall constitute one instrument. Section 9.05 Intention of Parties. The parties hereto intend that the Class G Trust be classified for United States federal income tax purposes as a grantor trust under Subpart E, Part I, Subchapter J, Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended, and not as a trust or association taxable as a corporation or as a partnership. Each 18 Certificateholder of a Class G Certificate, by its acceptance of its Class G Certificate or a beneficial interest therein, agrees to treat the Class G Trust as a grantor trust for all United States federal, state and local income tax purposes. The Trustee shall not be authorized or empowered to do anything that would cause the Class G Trust to fail to qualify as a grantor trust for such tax purposes (including as subject to this restriction, acquiring any Aircraft by bidding the Equipment Notes relating thereto or otherwise, or taking any action with respect to any such Aircraft once acquired). Section 9.06 Third Party Beneficiary. The parties hereto agree and acknowledge that the Policy Provider shall be a third party beneficiary of the provisions of Section 7.01 of this Trust Supplement providing for the Policy Provider's purchase rights as stated therein. 19 IN WITNESS WHEREOF, the parties have caused this Trust Supplement to be duly executed by their respective officers thereto duly authorized as of the date first written above. DELTA AIR LINES, INC. By: --------------------------------------- Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: --------------------------------------- Name: Title: 20 EXHIBIT A to TRUST SUPPLEMENT NO. 2003-1G FORM OF CERTIFICATE [THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE, THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3) AGREES THAT PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), IT WILL FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND IF REQUESTED, DELTA AIR LINES, INC., SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE CERTIFICATES PURSUANT TO CLAUSE 2(E) ABOVE OR UPON ANY TRANSFER OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.](1) [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS - -------- (1) To be included on the face of each Global Certificate (other than the Regulation S Global Certificate after the Distribution Compliance Expiration Date) and each U.S. Definitive Certificate. A-2 WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](2) BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT EITHER (A) NO ASSETS OF A PLAN OR ANY TRUST ESTABLISHED WITH RESPECT TO A PLAN HAVE BEEN USED TO ACQUIRE THIS CERTIFICATE OR AN INTEREST HEREIN OR (B) THE PURCHASE AND HOLDING OF THIS CERTIFICATE OR INTEREST HEREIN BY SUCH A PERSON ARE EXEMPT FROM THE PROHIBITED TRANSACTION RESTRICTIONS OF ERISA AND THE CODE OR MATERIALLY SIMILAR PROVISIONS OF SIMILAR LAW PURSUANT TO ONE OR MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS. CERTAIN TERMS USED IN THIS PARAGRAPH SHALL HAVE THE MEANINGS SPECIFIED IN THE AGREEMENT. - -------- (2) This legend to appear on Book-Entry Certificates to be deposited with The Depositary Trust Company. A-3 [GLOBAL CERTIFICATE](3) DELTA AIR LINES PASS THROUGH TRUST 2003-1G DELTA AIR LINES [INITIAL] [EXCHANGE] PASS THROUGH CERTIFICATE, SERIES 2003-1G Final Expected Regular Distribution Date: January 25, 2008 evidencing a fractional undivided interest in the Trust, the property of which includes or will include, among other things, certain Equipment Notes each secured by an Aircraft owned by Delta Air Lines, Inc. Certificate No. ______ $____________ Fractional Undivided Interest representing [ ]% of the CUSIP No. _______ Trust per $1,000 face amount THIS CERTIFIES THAT ________, for value received, is the registered owner of a $______ (______ dollars) Fractional Undivided Interest [or such greater or lesser amounts as shall be the aggregate outstanding face amount hereof as set forth in the records of the Trustee]* (the "Reference Principal Amount") in the Delta Air Lines Pass Through Trust, Series 2003-1G (the "Trust") created by U.S. BANK TRUST NATIONAL ASSOCIATION, as successor trustee (the "Trustee") under a Pass Through Trust Agreement, dated as of November 16, 2000 (the "Basic Agreement"), between State Street Bank and Trust Company of Connecticut, National Association and Delta Air Lines, Inc., a Delaware corporation (the "Company"), as supplemented by Trust Supplement No. 2003-1G thereto dated as of January 30, 2003 (collectively, the "Agreement"), between the Trustee and the Company, a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "Delta Air Lines [Initial] [Exchange] Pass Through Certificates, Series 2003-1G" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement. By virtue of its acceptance hereof, the Certificateholder of this Certificate assents to and agrees to be bound by all of the provisions of the Agreement and the Intercreditor Agreement, including the subordination provisions of Section 9.09 of the Intercreditor Agreement. The property of the Trust includes certain Equipment Notes and all rights of the Trust and the Trustee, on behalf of the Trust, to receive any payments under the Intercreditor Agreement, the Policy and the Liquidity Facilities (the "Trust Property"). Each issue of the Equipment Notes is secured by, among other things, a security interest in the Aircraft owned by the Company. - ------------- (3) To be included on the face of each Global Certificate. * To be included in Global Certificates for Initial Certificates. A-4 The Certificates represent Fractional Undivided Interests in the Trust and the Trust Property, and will have no rights, benefits or interest in respect of any other separate trust established pursuant to the terms of the Basic Agreement for any other series of certificates issued pursuant thereto. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, from funds then available to the Trustee, there will be distributed on each January 25, April 25, July 25 and October 25 (each, a "Regular Distribution Date"), commencing on April 25, 2003, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Regular Distribution Date, an amount in respect of the Scheduled Payments on the Equipment Notes due on such Regular Distribution Date, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Scheduled Payments. Subject to and in accordance with the terms of the Agreement and the Intercreditor Agreement, in the event that Special Payments on the Equipment Notes are received by the Trustee, from funds then available to the Trustee, there shall be distributed on the applicable Special Distribution Date, to the Person in whose name this Certificate is registered at the close of business on the 15th day preceding the Special Distribution Date, an amount in respect of such Special Payments on the Equipment Notes, the receipt of which has been confirmed by the Trustee, equal to the product of the percentage interest in the Trust evidenced by this Certificate and an amount equal to the sum of such Special Payments so received. If a Regular Distribution Date or Special Distribution Date is not a Business Day, distribution shall be made on the immediately following Business Day and interest shall accrue during the intervening period. The Trustee shall mail notice of each Special Payment and the Special Distribution Date therefor to the Certificateholder of this Certificate. [The Holder of this Certificate is entitled to the benefits of the Registration Rights Agreement, dated as of January 30, 2003, among the Company, the Trustee and the Initial Purchasers named therein (the "Registration Rights Agreement"). Subject to the terms of the Registration Rights Agreement, in the event that neither the consummation of the Exchange Offer nor the declaration by the Commission of a Shelf Registration to be effective (a "Registration Event") occurs on or prior to the 270th day after January 30, 2003, the interest rate per annum borne by the Certificates shall be increased by 0.25%, from and including such 270th day, to but excluding the date on which a Registration Event occurs. In the event that the Shelf Registration Statement ceases to be effective at any time during the period specified by the Registration Rights Agreement for more than 60 days, whether or not consecutive, during any 12-month period, the interest rate per annum borne by the Certificates shall be increased by 0.25% from the 61st day of the applicable 12-month period such Shelf Registration Statement ceases to be effective until such time as the Shelf Registration Statement again becomes effective.]4 Distributions on this Certificate will be made by the Trustee by check mailed to the Person entitled thereto, without the presentation or surrender of this Certificate or the making of any notation hereon, except that with respect to Certificates registered on the Record Date in - ------------- (4) To be included only on each Initial Certificate. A-5 the name of a Clearing Agency (or its nominee), such distributions shall be made by wire transfer. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after notice mailed by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency of the Trustee specified in such notice. The Certificates do not represent a direct obligation of, or an obligation guaranteed by, or an interest in, the Company, the Trustee or any Loan Trustee or any Affiliate thereof. The Certificates are limited in right of payment, all as more specifically set forth on the face hereof and in the Agreement. All payments or distributions made to Certificateholders under the Agreement shall be made only from the Trust Property and only to the extent that the Trustee shall have sufficient income or proceeds from the Trust Property to make such payments in accordance with the terms of the Agreement. Each Certificateholder of this Certificate, by its acceptance hereof, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for any payment or distribution to such Certificateholder pursuant to the terms of the Agreement and that it will not have any recourse to the Company, the Trustee or the Loan Trustees except as otherwise expressly provided in the Agreement, in any Note Document or in the Intercreditor Agreement. This Certificate does not purport to summarize the Agreement and reference is made to the Agreement for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby. A copy of the Agreement may be examined during normal business hours at the principal office of the Trustee, and at such other places, if any, designated by the Trustee, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Certificateholders under the Agreement at any time by the Company and the Trustee with the consent of the Certificateholders holding Certificates evidencing Fractional Undivided Interests aggregating not less than a majority in interest in the Trust. Any such consent by the Certificateholder of this Certificate shall be conclusive and binding on such Certificateholder and upon all future Certificateholders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Certificateholders of any of the Certificates. As provided in the Agreement and subject to certain limitations set forth therein, the transfer of this Certificate is registrable in the Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Registrar, or by any successor Registrar duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Registrar, duly executed by the Certificateholder hereof or such Certificateholder's attorney duly authorized in writing, and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust will be issued to the designated transferee or transferees. A-6 The Certificates are issuable only as registered Certificates without coupons in minimum denominations of [$100,000]5 [$1,000]6 Fractional Undivided Interest and multiples of $1,000 in excess thereof except that one Certificate may be issued in a different denomination. As provided in the Agreement and subject to certain limitations therein set forth, the Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate Fractional Undivided Interest in the Trust, as requested by the Certificateholder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee shall require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Company, the Trustee, the Registrar and any Paying Agent shall deem and treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Company, the Trustee, the Registrar or any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the distribution to Certificateholders of all amounts required to be distributed to them pursuant to the Agreement and the disposition of all property held as part of the Trust Property. Any Person acquiring or accepting this Certificate or an interest herein will, by such acquisition or acceptance, be deemed to represent and warrant to the Company, the Loan Trustees and the Trustee that either: (i) no assets of a Plan or any trust established with respect to a Plan, have been used to purchase this Certificate or an interest herein or (ii) the purchase and holding of this Certificate or interest herein by such Person are exempt from the prohibited transaction restrictions of ERISA and the Code or materially similar provisions of Similar Law pursuant to one or more prohibited transaction statutory or administrative exemptions. THIS CERTIFICATE AND THE AGREEMENT 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 AND CERTIFICATEHOLDERS HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Unless the certificate of authentication hereon has been executed by the Trustee, by manual signature, this Certificate shall not be entitled to any benefit under the Agreement or be valid for any purpose. - ------------- (5) To be included only on each Initial Certificate. (6) To be included on each Exchange Certificate. A-7 IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed. DELTA AIR LINES PASS THROUGH TRUST 2003-1G By: U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: ---------------------------------------- Title: Dated: FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Certificates referred to in the within-mentioned Agreement. U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee By: ------------------------------------------- Authorized Officer A-8 [FORM OF TRANSFER NOTICE] FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto Insert Taxpayer Identification No. ---------------------------------- Please print or typewrite name and address including zip code of assignee ---------------------------------- the within Certificate and all rights thereunder, hereby irrevocably constituting and appointing __________________________________ attorney to transfer said Certificate on the books of the Trustee with full power of substitution in the premises. [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES OTHER THAN EXCHANGE CERTIFICATES, REGULATION S DEFINITIVE CERTIFICATES AND AFTER THE DISTRIBUTION COMPLIANCE EXPIRATION DATE, REGULATION S GLOBAL CERTIFICATES] In connection with any transfer of this Certificate occurring prior to the date which is the earlier of (i) the date the shelf registration statement is declared effective or (ii) the end of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that without utilizing any general solicitation or general advertising that: [Check One] [ ] (a) this Certificate is being transferred in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Rule 144A thereunder. or [ ] (b) this Certificate is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Certificate and the Agreement. A-9 If none of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Certificate in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 4.04 of the Trust Supplement shall have been satisfied. Date: -------------------- ----------------------------------------------- NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. SIGNATURE GUARANTEE: ------------------------- Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Certificate for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: ------------------- ------------------------------------------------ NOTICE: To be executed by an executive officer A-10 EXHIBIT B to TRUST SUPPLEMENT NO. 2003-1G FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS OF CERTIFICATES PURSUANT TO REGULATION S [Date] U.S. Bank Trust National Association 225 Asylum Street, Goodwin Square Hartford, CT 06103 Attention: Corporate Trust Department Re: Delta Air Lines Inc. Pass Through Trust 2003-1G (the "Trust"), Delta Air Lines Pass Through Certificates, Series 2003-1G Ladies and Gentlemen: In connection with our proposed sale of $_____ Fractional Undivided Interest of the Certificates, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we represent that: (1) the offer of the Certificates was not made to a person in the United States; (2) either (a) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States; (3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(a) or Rule 904(a) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. In addition, if the sale is made during a distribution compliance period and the provisions of Rule 903(b)(2) or Rule 904(b)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(b)(2) or Rule 904(b)(1), as the case may be. You and Delta Air Lines, Inc. are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] EXHIBIT C to TRUST SUPPLEMENT NO. 2003-1G FORM OF ACCREDITED INVESTOR LETTER U.S. Bank Trust National Association 225 Asylum Street, Goodwin Square Hartford, CT 06103 Delta Air Lines, Inc. Hartsfield Atlanta International Airport Atlanta, GA 30320 Ladies and Gentlemen: In connection with our proposed purchase of Delta Air Lines Pass Through Certificates, Series 2003-1G (the "Certificates") we confirm that: 1. We understand that any subsequent transfer of the Certificates is subject to certain restrictions and conditions set forth in the Pass Through Trust Agreement between Delta Air Lines, Inc. (the "Company") and U.S. Bank Trust National Association as successor trustee (the "Trustee"), as supplemented by Trust Supplement No. 2003-1G thereto, relating to the Certificates, and we agree to be bound by, and not to resell, pledge or otherwise transfer the Certificates except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 2. We are purchasing Certificates having an aggregate principal amount of not less than $100,000 and each account (if any) for which we are purchasing Certificates is purchasing Certificates having an aggregate principal amount of not less than $100,000. 3. We understand that the Certificates have not been registered under the Securities Act, that the Certificates are being sold to us in a transaction that is exempt from the registration requirements of the Securities Act and that the Certificates may not be offered or resold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that, if we should sell any Certificates within the applicable time period referred to in Rule 144(k) of the Securities Act, we will do so only (A) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (B) inside the United States to an Institutional Accredited Investor (as defined below) acquiring $100,000 or more aggregate principal amount of such Certificates that, prior to such transfer, furnishes to the Trustee a signed letter containing certain representations and agreements relating to the restrictions on transfer of the Certificates (the form of which letter can be obtained from the Trustee), (C) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (D) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) or (E) pursuant to a registration statement which has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer), and we further agree to provide any person purchasing any of the Certificates from us a notice advising such purchaser that resales of the Certificates are restricted as stated herein. 4. We understand that, on any proposed resale of any Certificates, we will be required to furnish to the Company and to the Trustee such certificates, legal opinions and other information as the Company and the Trustee may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Certificates purchased by us will bear a legend to the foregoing effect. 5. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) ("Institutional Accredited Investor") and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Certificates, and we and any accounts for which we are acting are each able to bear the economic risk of our or their investments. 6. We are acquiring the Certificates purchased by us for our own account or for one or more accounts (each of which is an Institutional Accredited Investor) as to each of which we exercise sole investment discretion. You are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, By: --------------------------------- Name: Title: Securities to be Purchased: $ principal amount C-2 EXHIBIT D to TRUST SUPPLEMENT NO. 2003-1G DTC LETTER OF REPRESENTATIONS [INTENTIONALLY OMITTED] N3760C ------------------------------------- SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-IG EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULE PRINCIPAL PAYMENT DATE PAYMENTS ------------ ------------------ April 25, 2003 $ 0.00 July 25, 2003 0.00 October 25, 2003 0.00 January 25, 2004 1,107,117.84 April 25, 2004 0.00 July 25, 2004 0.00 October 25, 2004 0.00 January 25, 2005 1,881,880.19 April 25, 2005 0.00 July 25, 2005 0.00 October 25, 2005 0.00 January 25, 2006 1,027,880.76 April 25, 2006 0.00 July 25, 2006 0.00 October 25, 2006 0.00 January 25, 2007 1,749,818.43 April 25, 2007 0.00 July 25, 2007 0.00 October 25, 2007 0.00 January 25, 2008 16,150,787.91
N3761R ------------------------------------- SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULED PRINCIPAL PAYMENT DATE PAYMENTS ------------ ------------------- April 25, 2003 $ 0.00 July 25, 2003 0.00 October 25, 2003 0.00 January 25, 2004 1,107,117.84 April 25, 2004 0.00 July 25, 2004 0.00 October 25, 2004 0.00 January 25, 2005 1,881,880.19 April 25, 2005 0.00 July 25, 2005 0.00 October 25, 2005 0.00 January 25, 2006 1,027,880.76 April 25, 2006 0.00 July 25, 2006 0.00 October 25, 2006 0.00 January 25, 2007 1,749,818.43 April 25, 2007 0.00 July 25, 2007 0.00 October 25, 2007 0.00 January 25, 2008 16,150,787.91
I-A-2 N193DN - ---------------------------------------------------------- SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULED PRINCIPAL PAYMENT DATE PAYMENTS - ------------ ------------------- April 25, 2003 $ 0.00 July 25, 2003 707,055.82 October 25, 2003 1,339,010.88 January 25, 2004 0.00 April 25, 2004 0.00 July 25, 2004 1,040,999.31 October 25, 2004 1,290,022.67 January 25, 2005 0.00 April 25, 2005 0.00 July 25, 2005 992,011.11 October 25, 2005 1,241,034.47 January 25, 2006 0.00 April 25, 2006 0.00 July 25, 2006 943,022.90 October 25, 2006 1,192,046.27 January 25, 2007 0.00 April 25, 2007 0.00 July 25, 2007 894,034.70 October 25, 2007 1,143,058.06 January 25, 2008 19,217,751.61
I-A-3 N194DN --------------------- SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULED PRINCIPAL PAYMENT DATE PAYMENTS ---------------- ------------------- April 25, 2003 $ 0.00 July 25, 2003 0.00 October 25, 2003 2,439,498.38 January 25, 2004 0.00 April 25, 2004 0.00 July 25, 2004 0.00 October 25, 2004 2,341,098.45 January 25, 2005 0.00 April 25, 2005 0.00 July 25, 2005 0.00 October 25, 2005 2,242,698.51 January 25, 2006 0.00 April 25, 2006 0.00 July 25, 2006 0.00 October 25, 2006 2,144,298.58 January 25, 2007 0.00 April 25, 2007 0.00 July 25, 2007 0.00 October 25, 2007 2,045,898.64 January 25, 2008 19,302,986.85
I-A-4 N195DN ---------------------------- SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULED PRINCIPAL PAYMENT DATE PAYMENTS - ------------ ------------------- April 25, 2003 $ 0.00 July 25, 2003 0.00 October 25, 2003 2,439,498.38 January 25, 2004 0.00 April 25, 2004 0.00 July 25, 2004 0.00 October 25, 2004 2,341,098.45 January 25, 2005 0.00 April 25, 2005 0.00 July 25, 2005 0.00 October 25, 2005 2,242,698.51 January 25, 2006 0.00 April 25, 2006 0.00 July 25, 2006 0.00 October 25, 2006 2,144,298.58 January 25, 2007 0.00 April 25, 2007 0.00 July 25, 2007 0.00 October 25, 2007 2,045,898.64 January 25, 2008 19,302,986.85
I-A-5 N196DN ------------------------- SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULED PRINCIPAL PAYMENT DATE PAYMENTS ------------ ------------------- April 25, 2003 $ 0.00 July 25, 2003 0.00 October 25, 2003 1,098,625.74 January 25, 2004 1,349,622.63 April 25, 2004 0.00 July 25, 2004 0.00 October 25, 2004 1,049,249.30 January 25, 2005 1,300,246.20 April 25, 2005 0.00 July 25, 2005 0.00 October 25, 2005 999,872.87 January 25, 2006 1,250,869.76 April 25, 2006 0.00 July 25, 2006 0.00 October 25, 2006 950,496.43 January 25, 2007 1,201,493.32 April 25, 2007 0.00 July 25, 2007 0.00 October 25, 2007 901,119.99 January 25, 2008 20,526,133.10
I-A-6 N197DN ------------------------- SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULED PRINCIPAL PAYMENT DATE PAYMENTS ------------ ------------------- April 25, 2003 $ 0.00 July 25, 2003 0.00 October 25, 2003 0.00 January 25, 2004 2,463,181.70 April 25, 2004 0.00 July 25, 2004 0.00 October 25, 2004 0.00 January 25, 2005 2,363,826.47 April 25, 2005 0.00 July 25, 2005 0.00 October 25, 2005 0.00 January 25, 2006 2,264,471.24 April 25, 2006 0.00 July 25, 2006 0.00 October 25, 2006 0.00 January 25, 2007 2,165,116.01 April 25, 2007 0.00 July 25, 2007 0.00 October 25, 2007 0.00 January 25, 2008 21,561,000.45
I-A-7 N198DN ------------------------- SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULED PRINCIPAL PAYMENT DATE PAYMENTS ------------ ------------------- April 25, 2003 $ 1,669,849.99 July 25, 2003 0.00 October 25, 2003 0.00 January 25, 2004 1,115,902.20 April 25, 2004 1,370,846.15 July 25, 2004 0.00 October 25, 2004 0.00 January 25, 2005 1,065,749.29 April 25, 2005 1,320,693.24 July 25, 2005 0.00 October 25, 2005 0.00 January 25, 2006 1,015,596.38 April 25, 2006 1,270,540.33 July 25, 2006 0.00 October 25, 2006 0.00 January 25, 2007 965,443.48 April 25, 2007 1,220,387.43 July 25, 2007 0.00 October 25, 2007 0.00 January 25, 2008 21,772,070.51
I-A-8 N1611B ------------ SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULED PRINCIPAL PAYMENT DATE PAYMENTS - ------------ ------------------- April 25, 2003 $ 1,009,892.08 July 25, 2003 1,477,572.84 October 25, 2003 0.00 January 25, 2004 0.00 April 25, 2004 1,213,995.47 July 25, 2004 734,237.81 October 25, 2004 0.00 January 25, 2005 0.00 April 25, 2005 1,888,964.64 July 25, 2005 2,127,620.93 October 25, 2005 0.00 January 25, 2006 0.00 April 25, 2006 1,113,872.13 July 25, 2006 1,368,352.28 October 25, 2006 0.00 January 25, 2007 0.00 April 25, 2007 1,063,810.46 July 25, 2007 1,318,290.61 October 25, 2007 0.00 January 25, 2008 26,195,384.93
I-A-9 N178DZ ------------------------------------- SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULE PRINCIPAL PAYMENT DATE PAYMENTS ------------ ------------------ April 25, 2003 $ 1,009,892.08 July 25, 2003 1,477,572.84 October 25, 2003 0.00 January 25, 2004 0.00 April 25, 2004 1,213,995.47 July 25, 2004 734,237.81 October 25, 2004 0.00 January 25, 2005 0.00 April 25, 2005 1,188,964.64 July 25, 2005 2,127,620.93 October 25, 2005 0.00 January 25, 2006 0.00 April 25, 2006 1,113,872.13 July 25, 2006 1,368,352.28 October 25, 2006 0.00 January 25, 2007 0.00 April 25, 2007 1,063,810.46 July 25, 2007 1,318,290.61 October 25, 2007 0.00 January 25, 2008 26,195,384.93
I-A-10 N1612T ------------------------------------- SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULE PRINCIPAL PAYMENT DATE PAYMENTS ------------ ------------------ April 25, 2003 $ 1,048,670.22 July 25, 2003 518,234.11 October 25, 2003 0.00 January 25, 2004 0.00 April 25, 2004 1,313,089.85 July 25, 2004 2,320,217.02 October 25, 2004 0.00 January 25, 2005 0.00 April 25, 2005 1,236,599.18 July 25, 2005 747,908.78 October 25, 2005 0.00 January 25, 2006 0.00 April 25, 2006 1,211,102.29 July 25, 2006 2,167,235.67 October 25, 2006 0.00 January 25, 2007 0.00 April 25, 2007 1,134,611.62 July 25, 2007 1,393,830.00 October 25, 2007 0.00 January 25, 2008 29,118,887.55
I-A-11 N1613B ---------------------------- SCHEDULE I-A to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTE PRINCIPAL PAYMENTS
SCHEDULED PRINCIPAL PAYMENT DATE PAYMENTS - ------------ ------------------- April 25, 2003 $ 0.00 July 25, 2003 875,164.07 October 25, 2003 805,201.53 January 25, 2004 0.00 April 25, 2004 0.00 July 25, 2004 1,323,442.94 October 25, 2004 2,338,510.82 January 25, 2005 0.00 April 25, 2005 0.00 July 25, 2005 1,246,349.17 October 25, 2005 753,805.69 January 25, 2006 0.00 April 25, 2006 0.00 July 25, 2006 1,220,651.25 October 25, 2006 2,184,323.29 January 25, 2007 0.00 April 25, 2007 0.00 July 25, 2007 1,143,557.49 October 25, 2007 1,404,819.69 January 25, 2008 29,352,418.32
I-A-12 SCHEDULE I-B to TRUST SUPPLEMENT NO. 2003-1G AGGREGATE EQUIPMENT NOTE PRINCIPAL PAYMENTS PAYMENT DATE SCHEDULED PRINCIPAL PAYMENTS - ------------ ---------------------------- April 25, 2003 $ 4,738,304.37 July 25, 2003 5,055,599.68 October 25, 2003 8,121,834.91 January 25, 2004 7,142,942.21 April 25, 2004 5,111,926.94 July 25, 2004 6,153,134.89 October 25, 2004 9,359,979.69 January 25, 2005 8,493,582.34 April 25, 2005 4,935,221.70 July 25, 2005 7,241,510.92 October 25, 2005 7,480,110.05 January 25, 2006 6,586,698.90 April 25, 2006 4,709,386.88 July 25, 2006 7,067,614.38 October 25, 2006 8,615,463.15 January 25, 2007 7,831,689.67 April 25, 2007 4,482,619.97 July 25, 2007 6,068,003.41 October 25, 2007 7,540,795.02 January 25, 2008 264,846,580.92 SCHEDULE II to TRUST SUPPLEMENT NO. 2003-1G EQUIPMENT NOTES, PRINCIPAL AMOUNTS, MATURITIES AND AIRCRAFT
PRINCIPAL AMOUNT OF AIRCRAFT REGISTRATION EQUIPMENT NOTES MATURITY AIRCRAFT NUMBER ------------------- ---------------- -------------- --------------------- $21,917,485.13 January 25, 2008 Boeing 737-832 N3760C 21,917,485.13 January 25, 2008 Boeing 737-832 N3761R 30,000,047.80 January 25, 2008 Boeing 767-332 N193DN 30,516,479.41 January 25, 2008 Boeing 767-332 N194DN 30,516,479.41 January 25, 2008 Boeing 767-332 N195DN 30,627,729.34 January 25, 2008 Boeing 767-332 N196DN 30,817,595.87 January 25, 2008 Boeing 767-332 N197DN 32,787,079.00 January 25, 2008 Boeing 767-332 N198DN 38,811,994.18 January 25, 2008 Boeing 767-332 N1611B 38,811,994.18 January 25, 2008 Boeing 767-332 N178DZ 42,210,386.29 January 25, 2008 Boeing 767-332 N1612T 42,648,244.26 January 25, 2008 Boeing 767-332 N1613B
SCHEDULE III to TRUST SUPPLEMENT NO. 2003-1G NOTE DOCUMENTS Participation Agreement Indenture and Security Agreement For each of the aircraft listed in Schedule II. EX-4.4 5 g83137exv4w4.txt INTERCREDITOR AGREEMENT EXHIBIT 4.4 INTERCREDITOR AGREEMENT Dated as of January 30, 2003 among U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee of the Delta Air Lines Pass Through Trust 2003-1G, Delta Air Lines Pass Through Trust 2003-1C, and Delta Air Lines Pass Through Trust 2003-1D LANDESBANK BADEN-WURTTEMBERG, as Primary Liquidity Provider MERRILL LYNCH CAPITAL SERVICES, INC, as Above-Cap Liquidity Provider U.S. BANK TRUST NATIONAL ASSOCIATION, as Subordination Agent and AMBAC ASSURANCE CORPORATION, as Policy Provider TABLE OF CONTENTS
PAGE ---- ARTICLE I DEFINITIONS Section 1.01. Definitions.................................................................................2 ARTICLE II TRUST ACCOUNTS; CONTROLLING PARTY Section 2.01. Agreement to Terms of Subordination; Payments from Monies Received Only....................23 Section 2.02. Trust Accounts.............................................................................24 Section 2.03. Deposits to the Collection Account and Special Payments Account; Certain Distributions.....25 Section 2.04. Distributions of Special Payments..........................................................26 Section 2.05. Designated Representatives.................................................................29 Section 2.06. Controlling Party..........................................................................30 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED Section 3.01. Written Notice of Distribution.............................................................32 Section 3.02. Distribution of Amounts on Deposit in the Collection Account...............................35 Section 3.03. Distribution of Amounts on Deposit Following a Triggering Event............................37 Section 3.04. Other Payments.............................................................................41 Section 3.05. Payments to the Trustees, the Primary Liquidity Provider and the Policy Provider...........41 Section 3.06. Liquidity Facilities.......................................................................41 Section 3.07. The Policy.................................................................................50 ARTICLE IV EXERCISE OF REMEDIES Section 4.01. Directions from the Controlling Party......................................................54 Section 4.02. Remedies Cumulative........................................................................55 Section 4.03. Discontinuance of Proceedings..............................................................55 Section 4.04. Right of Certificateholders, the Primary Liquidity Provider and the Policy Provider to Receive Payments Not to Be Impaired........................................................55
ARTICLE V DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEES, ETC. Section 5.01. Notice of Indenture Event of Default or Triggering Event...................................56 Section 5.02. Indemnification............................................................................56 Section 5.03. No Duties Except as Specified in Intercreditor Agreement...................................56 Section 5.04. Notice from the Liquidity Providers and Trustees...........................................57 Section 5.05. Agreements Relating to the Above-Cap Liquidity Facility....................................57 ARTICLE VI THE SUBORDINATION AGENT Section 6.01. Authorization; Acceptance of Trusts and Duties.............................................57 Section 6.02. Absence of Duties..........................................................................57 Section 6.03. No Representations or Warranties as to Documents...........................................57 Section 6.04. No Segregation of Monies; No Interest......................................................58 Section 6.05. Reliance; Agents; Advice of Counsel........................................................58 Section 6.06. Capacity in Which Acting...................................................................58 Section 6.07. Compensation...............................................................................58 Section 6.08. May Become Certificateholder...............................................................59 Section 6.09. Subordination Agent Required; Eligibility..................................................59 Section 6.10. Money to Be Held in Trust..................................................................59 ARTICLE VII SUCCESSOR SUBORDINATION AGENT Section 7.01. Replacement of Subordination Agent; Appointment of Successor...............................59 ARTICLE VIII SUPPLEMENTS AND AMENDMENTS Section 8.01. Amendments, Waivers, Etc...................................................................61 Section 8.02. Subordination Agent Protected..............................................................62 Section 8.03. Effect of Supplemental Agreements..........................................................62 Section 8.04. Notices to Rating Agencies and the Policy Provider.........................................62 ARTICLE IX MISCELLANEOUS Section 9.01. Termination of Intercreditor Agreement.....................................................63 Section 9.02. Intercreditor Agreement for Benefit of Trustees, Liquidity Providers, Policy Provider and Subordination Agent....................................................................63
ii Section 9.03. Notices....................................................................................63 Section 9.04. Severability...............................................................................65 Section 9.05. No Oral Modifications or Continuing Waivers................................................65 Section 9.06. Successors and Assigns.....................................................................65 Section 9.07. Headings...................................................................................65 Section 9.08. Counterparts...............................................................................65 Section 9.09. Subordination..............................................................................65 Section 9.10. Governing Law..............................................................................67 Section 9.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity.......................67 Section 9.12. Non-Petition...............................................................................68
iii INTERCREDITOR AGREEMENT This INTERCREDITOR AGREEMENT, dated as of January 30, 2003, is made by and among U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association (in its individual capacity, together with its successors and permitted assigns, "U.S. BANK"), not in its individual capacity but solely as trustee of each Trust (such term and other capitalized terms used herein without definition being defined as provided in Article I); LANDESBANK BADEN-WURTTEMBERG, a bank established in Germany as a public law institution with legal capacity (Rechtsfahige Anstalt des Offentlichen Rechts), as the Primary Liquidity Provider; MERRILL LYNCH CAPITAL SERVICES, INC., as the Above-Cap Liquidity Provider; U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity except as expressly set forth herein, but solely as Subordination Agent and trustee hereunder (in such capacity, together with any successor appointed pursuant to Article VII, the "SUBORDINATION AGENT"); and AMBAC ASSURANCE CORPORATION, a Wisconsin domiciled stock insurance company ("AMBAC"), as the Policy Provider. WHEREAS, pursuant to each Indenture Delta will issue on a recourse basis three series of Equipment Notes secured by the related Aircraft; WHEREAS, pursuant to the Participation Agreements, each Trust will acquire those Equipment Notes having an interest rate identical to the interest rate applicable to the Certificates to be issued by such Trust; WHEREAS, pursuant to each Trust Agreement, the Trust created thereby proposes to issue a single class of Certificates (a "CLASS") bearing the interest rate and having the final distribution date described in such Trust Agreement on the terms and subject to the conditions set forth therein; WHEREAS, pursuant to the Purchase Agreement, the Initial Purchasers propose to purchase the Class G Certificates in the aggregate face amount of $391,583,000 on the terms and subject to the conditions set forth therein; WHEREAS, the Initial Class C Holder proposes to purchase the Class C Certificates in the aggregate face amount of $135,423,000 on the terms and subject to the conditions set forth in the Class C Trust Agreement and the Class C Statutory Trust Agreement; WHEREAS, the Initial Class D Holder proposes to purchase the Class D Certificates in the aggregate face amount of $65,392,000 on the terms and subject to the conditions set forth in the Class D Trust Agreement and the Class D Statutory Trust Agreement; WHEREAS, the Primary Liquidity Provider proposes to enter into a revolving credit agreement and the Above-Cap Liquidity Provider proposes to enter into an irrevocable interest rate cap agreement, in each case, with the Subordination Agent, as agent and trustee for the Trustee of the Class G Trust, for the benefit of the Class G Certificateholders; WHEREAS, the obligations of Merrill Lynch Capital Services, Inc. under the Above-Cap Liquidity Facility will be guaranteed by its parent, Merrill Lynch & Co., Inc. pursuant to a guarantee agreement (the "GUARANTEE"); WHEREAS, the Policy Provider proposes to enter into the Policy Provider Agreement providing for the issuance by the Policy Provider of the Policy for the benefit of the Class G Certificateholders; WHEREAS, the Subordination Agent, the Trustees, the Liquidity Providers and the Policy Provider hereby agree to the terms of subordination set forth in this Agreement in respect of each Class of Certificates; and NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. (a) The definitions stated herein apply equally to the singular and the plural forms of the terms defined. (b) All references in this Agreement to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement. (c) The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. (d) Unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation". (e) For purposes of this Agreement, unless the context otherwise requires, the following capitalized terms shall have the following meanings: "ABOVE-CAP ACCOUNT" means an Eligible Deposit Account in the name of the Subordination Agent maintained at an Eligible Institution, which shall be the Subordination Agent if it shall so qualify, into which all amounts paid under the Above-Cap Liquidity Facility pursuant to Section 3.06(a) shall be deposited. "ABOVE-CAP LIQUIDITY FACILITY" means, initially, the ISDA Master Agreement, dated as of the date hereof, between the Subordination Agent, as agent and trustee for the Class G Trust, and the initial Above-Cap Liquidity Provider, together with the Schedule and Confirmation thereto, relating to the Class G Certificates, and, from and after the replacement of such ISDA Master Agreement pursuant hereto, the Replacement Above-Cap Liquidity Facility therefor, if any, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms. 2 "ABOVE-CAP LIQUIDITY PROVIDER" means Merrill Lynch Capital Services, Inc. or any Replacement Above-Cap Liquidity Provider which has issued a Replacement Above-Cap Liquidity Facility to replace the Above-Cap Liquidity Facility pursuant to Section 3.06(c)(ii). "ABOVE-CAP PAYMENT" has the meaning specified in Section 3.06(a). "ABOVE-CAP RESERVE ACCOUNT" means an Eligible Deposit Account in the name of the Subordination Agent maintained at an Eligible Institution, which shall be the Subordination Agent if it shall so qualify, into which all amounts paid under the Above-Cap Liquidity Facility pursuant to Section 3.06(f) shall be deposited. "ABOVE-CAP WITHDRAWAL" has the meaning specified in Section 3.06(a). "ACCELERATION" means, with respect to the amounts payable in respect of the Equipment Notes issued under any Indenture, such amounts becoming immediately due and payable by declaration or otherwise. "Accelerate", "Accelerated" and "Accelerating" have meanings correlative to the foregoing. "ACCRUED CLASS G INTEREST" means, with respect to any Distribution Date, all amounts due and owing in respect of accrued and unpaid interest on the Class G Certificates at the Stated Interest Rate for the Class G Certificates on such Distribution Date. "ADDITIONAL PAYMENT" means any Break Amount and/or Make-Whole Amount payable in respect of the Equipment Notes. "ADJUSTED EXPECTED DISTRIBUTIONS" means, with respect to the Certificates of any Trust on any Current Distribution Date, the sum of (x) accrued and unpaid interest in respect of such Certificates and (y) the greater of: (A) the difference between (x) the Pool Balance of such Certificates as of the immediately preceding Distribution Date (or, if the Current Distribution Date is the first Distribution Date, the original aggregate face amount of the Certificates of such Trust) and (y) the Pool Balance of such Certificates as of the Current Distribution Date calculated on the basis that (i) the principal of the Non-Performing Equipment Notes held in such Trust has been paid in full and such payments have been distributed to the holders of such Certificates, (ii) the principal of the Performing Equipment Notes held in such Trust has been paid when due (whether at stated maturity or upon redemption (including but not limited to redemption pursuant to Section 2.10 of any Indenture), prepayment, purchase or otherwise, but without giving effect to any Acceleration of Performing Equipment Notes) and such payments have been distributed to the holders of such Certificates and (iii) the principal of any Equipment Notes formerly held in such Trust that have been sold pursuant to the terms hereof has been paid in full and such payments have been distributed to the holders of such Certificates, and (B) the amount of the excess, if any, of (i) the Pool Balance of such Class of Certificates as of the immediately preceding Distribution Date (or, if the Current Distribution Date is the first Distribution Date, the original aggregate face amount of the 3 Certificates of such Trust), over (ii) the Aggregate LTV Collateral Amount for such Class of Certificates for the Current Distribution Date; provided that, until the date of the initial LTV Appraisals for all the Aircraft, clause (B) shall not apply. For purposes of calculating Adjusted Expected Distributions with respect to the Certificates of any Trust, any Additional Payment paid on the Equipment Notes held in such Trust that has not been distributed to the Certificateholders of such Trust (other than such Additional Payment or a portion thereof applied to the distribution of interest on the Certificates of such Trust or the reduction of the Pool Balance of such Trust) shall be added to the amount of Adjusted Expected Distributions. "ADVANCE" means any Advance as defined in the Primary Liquidity Facility. "AFFILIATE" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "AGGREGATE LTV COLLATERAL AMOUNT" for any Class of Certificates for any Distribution Date means an amount, not less than zero, equal to the sum of the applicable LTV Collateral Amounts for such Class of Certificates for all Aircraft, minus the Pool Balance for each Class of Certificates, if any, senior to such Class, after giving effect to any distribution of principal on such Distribution Date with respect to such senior Class or Classes. "AIRCRAFT" means, with respect to each Indenture, the "Aircraft" referred to therein. "APPRAISAL" means a current fair market value appraisal (which may be a "desktop" appraisal) performed by any Appraiser or any other nationally recognized appraiser on the basis of an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller under no compulsion to sell and both having knowledge of all relevant facts. "APPRAISED CURRENT MARKET VALUE" of any Aircraft means the lower of the average and the median of the three most recent LTV Appraisals of such Aircraft. "APPRAISERS" means Aircraft Information Systems, Inc., BK Associates, Inc. and AvSolutions, Inc. "BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 United States Code ss.ss. 101 et seq., as amended, or any successor statutes thereto. 4 "BASIC AGREEMENT" means that certain Pass Through Trust Agreement, dated as of November 16, 2000, between Delta and U.S. Bank, as successor trustee, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms, but does not include any Trust Supplement. "BREAK AMOUNT" has the meaning specified in the Indentures. "BUSINESS DAY" means, with respect to the Certificates of any Class, (a) any day other than a Saturday, a Sunday or a day on which, (i) commercial banks are required or authorized to close in New York, New York, Atlanta, Georgia, or, so long as any Certificate of such Class is outstanding, the city and state in which the Trustee, the Subordination Agent or any related Loan Trustee maintains its Corporate Trust Office or receives and disburses funds, or (ii) solely with respect to draws under the Policy, the fiscal agent (if any) under the Policy, at its office specified in the Policy, the Policy Provider, at its office specified in the Policy, and insurance companies in New York, New York are required or authorized by law or executive order to close and (b) solely with respect to drawings under any Liquidity Facility, which day is also a "Business Day" as defined in such Liquidity Facility. "CAPPED INTEREST RATE" means initially 12.75% per annum and from and after the date on which the Stated Interest Rate applicable to the Class G Certificates is no longer subject to an additional margin as provided in the Registration Rights Agreement, shall mean 12.50% per annum. "CAPPED LIBOR" means, at any time, 11.75% per annum. "CASH COLLATERAL ACCOUNT" means the Primary Cash Collateral Account or the Above-Cap Reserve Account, as applicable. "CERTIFICATE" means a Class G Certificate, a Class C Certificate or a Class D Certificate, as applicable. "CERTIFICATEHOLDER" means, with respect to any Class of Certificates, the Person in whose name a Certificate is registered in the Register for the Certificates of such Class. "CITIZEN OF THE UNITED STATES" has the meaning specified for such term in Section 40102(a)(15) of Title 49 of the United States Code or any similar legislation of the United States enacted in substitution or replacement therefor. "CLASS" has the meaning specified in the recitals to this Agreement. "CLASS C CERTIFICATEHOLDER" means, at any time, any Certificateholder of one or more Class C Certificates. "CLASS C CERTIFICATES" means the certificates issued by the Class C Trust, substantially in the form of Exhibit A to the Class C Trust Agreement, and authenticated by the Class C Trustee, representing Fractional Undivided Interests in the Class C Trust, and any certificates issued in exchange therefor or replacement thereof pursuant to the terms of the Class C Trust Agreement. 5 "CLASS C STATUTORY TRUST AGREEMENT" means the Trust Agreement dated as of January 29, 2003 between Delta and Wilmington Trust Company, as owner trustee, governing the creation and administration of the Initial Class C Holder, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "CLASS C TRUST" means the Delta Air Lines Pass Through Trust 2003-1C created and administered pursuant to the Class C Trust Agreement. "CLASS C TRUST AGREEMENT" means the Basic Agreement, as supplemented by Trust Supplement No. 2003-1C thereto, dated as of the date hereof, governing the creation and administration of the Delta Air Lines Pass Through Trust 2003-1C and the issuance of the Class C Certificates, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "CLASS C TRUSTEE" means U.S. Bank Trust National Association, not in its individual capacity except as expressly set forth in the Class C Trust Agreement, but solely as trustee under the Class C Trust Agreement, together with any successor trustee appointed pursuant thereto. "CLASS D CERTIFICATEHOLDER" means, at any time, any Certificateholder of one or more Class D Certificates. "CLASS D CERTIFICATES" means the certificates issued by the Class D Trust, substantially in the form of Exhibit A to the Class D Trust Agreement, and authenticated by the Class D Trustee, representing Fractional Undivided Interests in the Class D Trust, and any certificates issued in exchange therefor or replacement thereof pursuant to the terms of the Class D Trust Agreement. "CLASS D STATUTORY TRUST AGREEMENT" means the Trust Agreement dated as of January 29, 2003 between Delta and Wilmington Trust Company, as owner trustee, governing the creation and administration of the Initial Class D Holder, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "CLASS D TRUST" means the Delta Air Lines Pass Through Trust 2003-1D created and administered pursuant to the Class D Trust Agreement. "CLASS D TRUST AGREEMENT" means the Basic Agreement, as supplemented by Trust Supplement No. 2003-1D thereto, dated as of the date hereof, governing the creation and administration of the Delta Air Lines Pass Through Trust 2003-1D and the issuance of the Class D Certificates, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "CLASS D TRUSTEE" means U.S. Bank Trust National Association, not in its individual capacity except as expressly set forth in the Class D Trust Agreement, but solely as trustee under the Class D Trust Agreement, together with any successor trustee appointed pursuant thereto. 6 "CLASS G CERTIFICATEHOLDER" means, at any time, any Certificateholder of one or more Class G Certificates. "CLASS G CERTIFICATES" means the certificates issued by the Class G Trust, substantially in the form of Exhibit A to the Class G Trust Agreement, and authenticated by the Class G Trustee, representing Fractional Undivided Interests in the Class G Trust, and any certificates issued in exchange therefor or replacement thereof pursuant to the terms of the Class G Trust Agreement. "CLASS G TRUST" means the Delta Air Lines Pass Through Trust 2003-1G created and administered pursuant to the Class G Trust Agreement. "CLASS G TRUST AGREEMENT" means the Basic Agreement, as supplemented by Trust Supplement No. 2003-1G thereto, dated as of the date hereof, governing the creation and administration of the Delta Air Lines Pass Through Trust 2003-1G and the issuance of the Class G Certificates, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "CLASS G TRUSTEE" means U.S. Bank Trust National Association, not in its individual capacity except as expressly set forth in the Class G Trust Agreement, but solely as trustee under the Class G Trust Agreement, together with any successor trustee appointed pursuant thereto. "CLOSING DATE" means January 30, 2003. "CODE" means the Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder. "COLLATERAL" means, with respect to any Indenture, the "Collateral" referred to therein. "COLLECTION ACCOUNT" means the Eligible Deposit Account established by the Subordination Agent pursuant to Section 2.02(a) in and from which the Subordination Agent shall make deposits and withdrawals in accordance with this Agreement. "CONSENT NOTICE" has the meaning specified in Section 3.06(d). "CONSENT PERIOD" has the meaning specified in Section 3.06(d). "CONTROLLING PARTY" means the Person entitled to act as such pursuant to the terms of Section 2.06. "CORPORATE TRUST OFFICE" means, with respect to any Trustee, the Subordination Agent or any Loan Trustee, the office of such Person in the city at which, at any particular time, its corporate trust business shall be principally administered. 7 "CURRENT DISTRIBUTION DATE" means a Distribution Date specified as a reference date for calculating the Expected Distributions or the Adjusted Expected Distributions with respect to the Certificates of any Trust as of such Distribution Date. "DEFAULTED SERIES G EQUIPMENT NOTE" has the meaning specified in Section 3.07(c). "DEFICIENCY AMOUNT" has the meaning specified in Section 3.06(a). "DELTA" means Delta Air Lines, Inc., a Delaware corporation, and its successors and permitted assigns. "DELTA BANKRUPTCY EVENT" means the occurrence and continuation of any of the following: (a) Delta consents to the appointment of or the taking of possession by a receiver, trustee or liquidator of itself or 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 creditors; (b) Delta 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 Delta as a debtor in any such case, or Delta seeks relief as a debtor 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 Delta seeks an agreement, composition, extension or adjustment with its creditors under such laws; or (c) an order, judgment or decree is entered by any court of competent jurisdiction appointing, without the consent of Delta , a receiver, trustee or liquidator of Delta or sequestering any substantial part of its property, or granting any other relief in respect of Delta 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 and unvacated for a period of 90 days after the date of entry thereof; or (d) a petition against Delta 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 applies to Delta, any court of competent jurisdiction assumes jurisdiction, custody or control of Delta or of any substantial part of its property and such jurisdiction, custody or control remains in force unrelinquished, unstayed and unterminated for a period of 90 days. "DELTA PROVISIONS" has the meaning specified in Section 8.01(a). 8 "DESIGNATED REPRESENTATIVES" means the Subordination Agent Representatives, the Trustee Representatives, the Policy Provider Representatives, and the Liquidity Provider Representatives identified under Section 2.05. "DISPOSITION PAYMENT" has the meaning specified in Section 3.07(b). "DISTRIBUTION DATE" means a Regular Distribution Date or a Special Distribution Date. "DOLLARS" means the lawful currency of the United States. "DOWNGRADE DRAWING" has the meaning specified in Section 3.06(c). "DOWNGRADED FACILITY" has the meaning specified in Section 3.06(c). "DRAWING" means an Interest Drawing, a Final Drawing, a Non-Extension Drawing or a Downgrade Drawing, as the case may be. "ELECTION DISTRIBUTION DATE" has the meaning specified in Section 3.07(c). "ELECTION INTEREST PAYMENT" has the meaning specified in Section 3.07(c). "ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States or any one of the states thereof or the District of Columbia (or any United States branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution has a long-term unsecured debt rating of at least A3 or its equivalent by Moody's or at least A- or its equivalent by S&P. An Eligible Deposit Account may be maintained with the Subordination Agent or Primary Liquidity Provider so long as the Subordination Agent or such Primary Liquidity Provider is an Eligible Institution; provided that the Subordination Agent, in its individual capacity, or such Primary Liquidity Provider shall have waived all rights of set-off and counterclaim with respect to such account. "ELIGIBLE INSTITUTION" means (a) the corporate trust department of the Subordination Agent or any Trustee, as applicable, or (b) a depository institution organized under the laws of the United States of America or any state thereof or the District of Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured debt rating of at least A3 or its equivalent by Moody's or at least A- or its equivalent by S&P. "ELIGIBLE INVESTMENTS" means investments in (a) obligations of the United States government or agencies thereof, or obligations guaranteed by the United States government, having maturities no later than 90 days following the date of such investment, (b) open market commercial paper of any corporation incorporated under the laws of the United States or any state thereof with a short-term unsecured debt rating of at least P-1 or its equivalent by Moody's or with a short-term issuer credit rating of at least A-1 or its equivalent by S&P, having maturities no later than 90 days following the date of such investment, (c) certificates of deposit issued by commercial banks organized under the laws of the United States or of any political 9 subdivision thereof (or any United States branch of a foreign bank) having a combined capital and surplus in excess of $500,000,000 which banks or their holding companies have a short-term unsecured debt rating of A or its equivalent by Moody's or a short-term issuer credit rating of A or its equivalent by S&P, provided, however, that the aggregate amount of Eligible Investments at any one time invested in certificates of deposit issued by any one bank shall not be in excess of 5% of such bank's capital and surplus, (d) Dollar denominated offshore certificates of deposit issued by, or offshore time deposits with, any commercial bank described in (c) or any subsidiary thereof, and (e) repurchase agreements with any financial institution having combined capital and surplus of at least $500,000,000 with any of the obligations described in clauses (a) through (d) as collateral so long as such investment is held by a third party custodian also qualifying as an Eligible Institution. Notwithstanding the foregoing, no investment of the type described in clause (b) above which is issued or guaranteed by Delta or any of its Affiliates and no investment in the obligations of any one bank in excess of $10,000,000 shall be an Eligible Investment unless written approval has been obtained from the Policy Provider and a Ratings Confirmation shall have been received with respect to the making of such investment. If none of the above investments is available, the entire amounts to be invested may be used to purchase Federal funds from an entity described in clause (c). All Eligible Investments must be held in an Eligible Deposit Account. Any of the investments described herein may be made through or with, as applicable, the bank acting as Trustee or its Affiliates. "EQUIPMENT NOTES" means, at any time, the Series G Equipment Notes, the Series C Equipment Notes and the Series D Equipment Notes, collectively, and in each case, any Equipment Notes issued in exchange therefor or replacement thereof pursuant to the terms of the Indentures. "EXCESS INTEREST POLICY DRAWING" has the meaning specified in Section 3.07(c). "EXCESS REIMBURSEMENT OBLIGATIONS" means, (a) in the event of any Policy Provider Election with respect to a Series G Equipment Note, the portion of the Policy Provider Obligations that represents interest on such Equipment Note in excess of 21 months of interest at the interest rate applicable to such Equipment Note and (b) any interest on the Liquidity Obligations in respect of the Primary Liquidity Facility paid by the Policy Provider to the Primary Liquidity Provider from and after the end of the 21-month period referred to in Section 3.07(c). "EXPECTED DISTRIBUTIONS" means, with respect to the Certificates of any Trust on any Current Distribution Date, the sum of (x) accrued and unpaid interest in respect of such Certificates and (y) the difference between (A) the Pool Balance of such Certificates as of the immediately preceding Distribution Date (or, if the Current Distribution Date is the first Distribution Date, the original aggregate face amount of the Certificates of such Trust) and (B) the Pool Balance of such Certificates as of the Current Distribution Date calculated on the basis that (i) the principal of the Equipment Notes held in such Trust has been paid when due (whether at stated maturity or upon redemption (including but not limited to any redemption pursuant to Section 2.10 of any Indenture), prepayment, purchase or Acceleration or otherwise) and such payments have been distributed to the holders of such Certificates and (ii) the principal of any Equipment Notes formerly held in such Trust that have been sold pursuant to the terms hereof has been paid in full and such payments have been distributed to the holders of such Certificates. 10 For purposes of calculating Expected Distributions with respect to the Certificates of any Trust, any Additional Payment paid on the Equipment Notes held in such Trust which has not been distributed to the Certificateholders of such Trust (other than such Additional Payment or a portion thereof applied to distributions of interest on the Certificates of such Trust or the reduction of the Pool Balance of such Trust) shall be added to the amount of such Expected Distributions. "FEE LETTER" means the Fee Letter among the initial Primary Liquidity Provider, the Subordination Agent and Delta with respect to the initial Primary Liquidity Facility and any fee letter entered into among the Subordination Agent, Delta and any Replacement Primary Liquidity Provider. "FINAL DISTRIBUTIONS" means, with respect to the Certificates of any Trust on any Distribution Date, the sum of (x) the aggregate amount of all accrued and unpaid interest in respect of such Certificates and (y) the Pool Balance of such Certificates as of the immediately preceding Distribution Date. For purposes of calculating Final Distributions with respect to the Certificates of any Trust, any Additional Payment paid on the Equipment Notes held in such Trust which has not been distributed to the Certificateholders of such Trust (other than such Additional Payment or a portion thereof applied to distributions of interest on the Certificates of such Trust or the reduction of the Pool Balance of such Trust) shall be added to the amount of such Final Distributions. "FINAL DRAWING" has the meaning specified in Section 3.06(i). "FINAL LEGAL DISTRIBUTION DATE" means (i) with respect to the Class G Certificates, July 25, 2009, (ii) with respect to the Class C Certificates, January 25, 2008 and (iii) with respect to the Class D Certificates, January 25, 2008. "FRACTIONAL UNDIVIDED INTEREST" means the fractional undivided interest in a Trust that is represented by a Certificate relating to such Trust. "GUARANTEE" has the meaning specified in the recitals to this Agreement. "INDENTURE" means each of the Indenture and Security Agreements dated the date hereof entered into by the Loan Trustee and Delta pursuant to the related Participation Agreements providing for the issuance of the Equipment Notes on the date hereof, in each case as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "INDENTURE EVENT OF DEFAULT" means, with respect to any Indenture, any Event of Default (as such term is defined in such Indenture) thereunder. "INITIAL CLASS C HOLDER" means Delta 2003-1 Class C Certificate Trust, a Delaware statutory trust organized pursuant to the Class C Statutory Trust Agreement, as the sole initial purchaser and holder of the Class C Certificates. 11 "INITIAL CLASS D HOLDER" means Delta 2003-1 Class D Certificate Trust, a Delaware statutory trust organized pursuant to the Class D Statutory Trust Agreement, as the sole initial purchaser and holder of the Class D Certificates. "INITIAL PURCHASERS" means the initial purchasers listed as such in the Purchase Agreement. "INTEREST DRAWING" has the meaning specified in Section 3.06(a). "INTEREST PAYMENT DATE" means, each date on which interest is due and payable under the Primary Liquidity Facility on a Downgrade Drawing, Non-Extension Drawing or Final Drawing thereunder. "INTEREST PERIOD" has the meaning assigned to such term in the Indentures. "INVESTMENT EARNINGS" means investment earnings on funds on deposit in the Trust Accounts net of losses and the Subordination Agent's reasonable expenses in making such investments. "LATE PAYMENT RATE" has the meaning specified in the Policy Provider Agreement. "LIBOR" has the meaning assigned to such term in the Reference Agency Agreement. "LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance, lease, sublease or security interest of any kind. "LIQUIDITY EVENT OF DEFAULT" has the meaning specified in the Primary Liquidity Facility. "LIQUIDITY EXPENSES" means, with respect to the Primary Liquidity Facility, all Liquidity Obligations other than (i) the principal amount of any Drawings under the Primary Liquidity Facility and (ii) any interest accrued on any Liquidity Obligations. "LIQUIDITY FACILITY" means, at any time, the Primary Liquidity Facility or the Above-Cap Liquidity Facility, as applicable. "LIQUIDITY OBLIGATIONS" means all principal, interest, fees and other amounts owing to the Primary Liquidity Provider under the Primary Liquidity Facility, Section 4.02 of the Participation Agreements or the Fee Letter. "LIQUIDITY PROVIDER" means, at any time, the Primary Liquidity Provider, or the Above-Cap Liquidity Provider, as applicable. "LIQUIDITY PROVIDER INCUMBENCY CERTIFICATE" has the meaning specified in Section 2.05(c). 12 "LIQUIDITY PROVIDER REPRESENTATIVES" has the meaning specified in Section 2.05(c). "LOAN TRUSTEE" means, with respect to any Indenture, the bank, trust company or other financial institution designated as loan trustee thereunder, and any successor to such loan trustee. "LTV APPRAISALS" has the meaning specified in Section 4.01(a)(iv). "LTV COLLATERAL AMOUNT" of any Aircraft for any Class of Certificates means, as of any Distribution Date, the lesser of (i)(x) with respect to any Aircraft other than an Aircraft referred to in the following clause (y), the LTV Ratio for such Class of Certificates multiplied by the Appraised Current Market Value of such Aircraft or (y) with respect to any such Aircraft that has suffered an Event of Loss under and as defined in the relevant Indenture, the amount of the insurance proceeds paid to the related Loan Trustee in respect thereof to the extent then held by such Loan Trustee (and/or on deposit in the Special Payments Account) or payable to such Loan Trustee in respect thereof and (ii) the outstanding principal amount of the Equipment Notes secured by such Aircraft after giving effect to any principal payments of such Equipment Notes on or before such Distribution Date. "LTV RATIO" means (i) for the Class G Certificates, 49.0%, (ii) for the Class C Certificates, 65.9%, and (iii) for the Class D Certificates, 74.1%. "MAKE- WHOLE AMOUNT" has the meaning specified in the Indentures. "MANDATORY TERMINATION EVENT" has the meaning specified in Section 3.06(c)(ii). "MAXIMUM AVAILABLE COMMITMENT" has the meaning specified in the Primary Liquidity Facility. "MINIMUM SALE PRICE" means, with respect to any Aircraft or the Equipment Notes issued in respect of such Aircraft, at any time, the lesser of (a) 75% of the Appraised Current Market Value of such Aircraft and (b) the aggregate outstanding principal amount of such Equipment Notes, plus accrued and unpaid interest thereon. "MOODY'S" means Moody's Investors Service, Inc. "NON-CONTROLLING PARTY" means, at any time, the Policy Provider, any Trustee or Liquidity Provider which is not the Controlling Party at such time. "NON-EXTENDED FACILITY" has the meaning specified in Section 3.06(d). "NON-EXTENSION DRAWING" has the meaning specified in Section 3.06(d). "NON-PERFORMING EQUIPMENT NOTE" means an Equipment Note issued pursuant to an Indenture that is not a Performing Equipment Note. "NOTICE OF AVOIDED PAYMENT" has the meaning specified in the Policy. 13 "NOTICE OF NONPAYMENT" has the meaning specified in the Policy. "OPERATIVE AGREEMENTS" means this Agreement, the Liquidity Facilities, the Guarantee, the Statutory Trust Agreements, the Policy, the Policy Provider Agreement, the Policy Fee Letter, the Fee Letter, the Indentures, the Trust Agreements, the Participation Agreements, the Reference Agency Agreement, the Equipment Notes and the Certificates, together with all exhibits and schedules included with any of the foregoing. "ORDER" has the meaning specified in the Policy. "OUTSTANDING" means, when used with respect to each Class of Certificates, as of the date of determination, all Certificates of such Class theretofore authenticated and delivered under the related Trust Agreement, except: (i) Certificates of such Class theretofore cancelled by the Registrar (as defined in such Trust Agreement) or delivered to the Trustee thereunder or such Registrar for cancellation; (ii) all of the Certificates of such Class if money in the full amount required to make the final distribution with respect to such Class pursuant to Section 11.01 of such Trust Agreement has been theretofore deposited with the related Trustee in trust for the Certificateholders of such Certificates as provided in Section 4.01 of such Trust Agreement, pending distribution of such money to such Certificateholders pursuant to payment of such final distribution payment; and (iii) Certificates of such Class in exchange for or in lieu of which other Certificates of such Class have been authenticated and delivered pursuant to such Trust Agreement; provided, however, that in determining whether the holders of the requisite Fractional Undivided Interest of such Certificates have given any request, demand, authorization, direction, notice, consent or waiver hereunder, any Certificates owned by Delta or any of its Affiliates shall be disregarded and deemed not to be Outstanding. In determining whether such Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Certificates that such Trustee knows to be so owned shall be so disregarded. Notwithstanding the foregoing, (x) if Delta and its Affiliates own 100% of the Certificates of each Class, such Certificates shall not be so disregarded and (y) if any amount of such Certificates owned by Delta and its Affiliates have been pledged in good faith, such Certificates shall not be disregarded if the pledgee establishes to the satisfaction of the applicable Trustee the pledgee's right so to act with respect to such Certificates and that the pledgee is not Delta or any of its Affiliates. "OVERDUE SCHEDULED PAYMENT" means any Scheduled Payment which is not in fact received by the Subordination Agent within five days after the Scheduled Payment Date relating thereto. 14 "PARTICIPATION AGREEMENT" means, with respect to each Indenture, the "Participation Agreement" referred to therein, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "PAYEES" has the meaning specified in Section 2.03(c). "PERFORMING EQUIPMENT NOTE" means an Equipment Note issued pursuant to an Indenture with respect to which no payment default has occurred and is continuing (without giving effect to any Acceleration); provided, that in the event of a bankruptcy proceeding in which Delta is a debtor under the Bankruptcy Code, (i) any payment default occurring before the date of the order for relief for such proceeding shall not be taken into consideration during the 60-day period under Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer period as may apply under Section 1110(b) of the Bankruptcy Code) (the "Section 1110 Period"), (ii) any payment default occurring after the date of the order for relief in such proceeding shall not be taken into consideration if such payment default is cured under Section 1110(a)(2)(B) of the Bankruptcy Code before the later of 30 days after the date of such default or the expiration of the Section 1110 Period and (iii) any payment default occurring after the Section 1110 Period will not be taken into consideration if such payment default is cured before the end of the grace period, if any, set forth in the related Indenture. "PERFORMING NOTE DEFICIENCY" means any time that less than 65% of the then aggregate outstanding principal amount of all Equipment Notes are Performing Equipment Notes. "PERSON" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, trustee, unincorporated organization or government or any agency or political subdivision thereof. "POLICY" means the Ambac Certificate Guaranty Insurance Policy No. AB0634BE issued as of the Closing Date by the Policy Provider, together with the Certificate Guaranty Insurance Policy Endorsement attached thereto, in favor of the Subordination Agent for the benefit of the Class G Certificateholders, as amended, supplemented or otherwise modified from time to time in accordance with its terms. "POLICY ACCOUNT" means the Eligible Deposit Account established pursuant to Section 2.02(a)(iii) into which amounts shall be deposited as referred to in Section 3.07. "POLICY DRAWING" means any payment of a claim under the Policy. "POLICY EXPENSES" means all amounts (including amounts in respect of expenses) owing to the Policy Provider under the Policy Provider Agreement or the Participation Agreements other than (i) any amounts due under the Policy Fee Letter, (ii) the amount of any Policy Drawing and any interest accrued thereon, (iii) reimbursement of and interest on the Liquidity Obligations paid to the Primary Liquidity Provider by the Policy Provider, (iv) any indemnity payments owed to the Policy Provider, (v) any amounts that the Policy Provider is entitled to receive by virtue of the subrogation rights of the Policy Provider hereunder, including, without limitation, fees and expenses incurred in connection with the enforcement of such rights and (vi) any Excess Reimbursement Obligations. 15 "POLICY FEE LETTER" means the fee letter, dated as of January 30, 2003 from the Policy Provider to Delta and the Subordination Agent setting forth the Premium and certain other amounts payable in respect of the Policy. "POLICY PROVIDER" means Ambac Assurance Corporation, or any successor thereto, as issuer of the Policy. "POLICY PROVIDER AGREEMENT" means the Insurance and Indemnity Agreement, dated as of the date of issuance of the Certificates, among the Subordination Agent, the Class G Trustee, Delta and the Policy Provider, as amended, supplemented or otherwise modified from time to time in accordance with its terms. "POLICY PROVIDER DEFAULT" means the occurrence of any of the following events: (a) the Policy Provider fails to make a payment required under the Policy in accordance with its terms and such failure remains unremedied for two Business Days following the delivery of Written Notice of such failure to the Policy Provider or (b) the Policy Provider (i) files any petition or commences any case or proceeding under any provisions of any federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii) makes a general assignment for the benefit of its creditors or (iii) has an order for relief entered against it under any federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization that is final and nonappealable, or (c) a court of competent jurisdiction, the Wisconsin Department of Insurance or another competent regulatory authority enters a final and nonappealable order, judgment or decree (i) appointing a custodian, trustee, agent or receiver for the Policy Provider or for all or any material portion of its property or (ii) authorizing the taking of possession by a custodian, trustee, agent or receiver of the Policy Provider (or taking of possession of all or any material portion of the Policy Provider's property). "POLICY PROVIDER ELECTION" has the meaning specified in Section 3.07(c). "POLICY PROVIDER INCUMBENCY CERTIFICATE" has the meaning specified in Section 2.05(d). "POLICY PROVIDER INTEREST AMOUNTS" means (i) interest on unreimbursed Policy Drawings to the extent not included in Policy Provider Obligations and (ii) interest on all amounts due and unpaid to the Policy Provider under the Policy Provider Agreement (including, without limitation, interest on all due and unpaid premium, fees, expenses, and indemnities), in each case, accruing at the Late Payment Rate. For the avoidance of doubt, interest on unreimbursed Policy Drawings shall be deemed to commence accruing on the date on which such Policy Drawing is made. "POLICY PROVIDER OBLIGATIONS" means all reimbursement and other amounts, including fees and indemnities, due to the Policy Provider under the Policy Provider Agreement (including, without limitation, Policy Drawings) to the extent not included in the definition of Policy Expenses, but shall not include (i) any amounts due under the Policy Fee Letter or Excess Reimbursement Obligations and (ii) any interest on Policy Drawings except, if the Primary Liquidity Provider has failed to honor its obligation to make a payment on any Interest Drawing in respect of the Class G Certificates, interest on the portion of any Policy Drawing made to 16 cover the shortfall attributable to such failure by the Primary Liquidity Provider in an amount equal to the amount of interest that would have accrued on such Interest Drawing if such Interest Drawing had been made at the interest rate applicable to such Interest Drawing until such Policy Drawing has been repaid in full, up to a maximum of six such Policy Drawings under the Policy. For the avoidance of doubt, and subject to the effect of payment priorities with respect to Excess Reimbursement Obligations, Policy Provider Obligations include reimbursement of and interest on the Liquidity Obligations in respect of the Primary Liquidity Facility paid by the Policy Provider to the Primary Liquidity Provider. "POLICY PROVIDER REPRESENTATIVES" has the meaning specified in Section 2.05(d). "POOL BALANCE" means, with respect to the Certificates of any Class, as of any date, (i) the original aggregate face amount of the Certificates of such Class less (ii) the aggregate amount of all distributions made as of such date in respect of such Certificates other than distributions made as of such date in respect of interest or Additional Payment thereon or reimbursement of any costs or expenses incurred in connection therewith. The Pool Balance as of any Distribution Date with respect to each Class shall be computed after giving effect to the payment of principal, if any, on the Equipment Notes or other Trust Property held in the related Trust and the distribution thereof to be made on such date and, with respect to the Class G Trust, payments under the Policy for the benefit of the Class G Certificateholders (other than in respect of the Liquidity Facilities and interest on the Class G Certificates). "PREFERENCE AMOUNT" has the meaning specified in the Policy. "PREMIUM" has the meaning specified in the Policy Fee Letter. "PRIMARY CASH COLLATERAL ACCOUNT" means an Eligible Deposit Account in the name of the Subordination Agent maintained at an Eligible Institution, which shall be the Subordination Agent if it so qualifies, into which amounts shall be deposited as referred to in Section 3.06(f). "PRIMARY LIQUIDITY FACILITY" means, initially, the Revolving Credit Agreement, dated as of the date hereof, between the Subordination Agent, as agent and trustee for the Class G Trustee, and Landesbank Baden-Wurttemberg and, from and after the replacement of such agreement pursuant hereto, the Replacement Primary Liquidity Facility therefor, if any, in each case as amended, supplemented or otherwise modified from time to time in accordance with its terms. "PRIMARY LIQUIDITY PROVIDER" means Landesbank Baden-Wurttemberg or any Replacement Primary Liquidity Provider that has issued a Replacement Primary Liquidity Facility to replace the Primary Liquidity Facility pursuant to Section 3.06(c) or 3.06(e). "PROCEEDING" means any suit in equity, action at law or other judicial or administrative proceeding. "PTC EVENT OF DEFAULT" means, with respect to each Trust Agreement, the failure to distribute within 10 Business Days after the applicable Distribution Date: (i) the outstanding Pool Balance of the applicable Class of Certificates on the Final Legal Distribution Date for such 17 Class (unless, in the case of the Class G Certificates, the Subordination Agent shall have made a drawing under the Policy, in an amount sufficient to pay such outstanding Pool Balance and shall have distributed such amount to the Class G Trustee) or (ii) interest scheduled for distribution on such Certificates on any Distribution Date (unless, in the case of the Class G Certificates, the Subordination Agent shall have made an Interest Drawing, or a withdrawal from the Primary Cash Collateral Account and/or a withdrawal from the Above-Cap Account and/or a drawing under the Policy, with respect thereto in an aggregate amount sufficient to pay such interest and shall have distributed such amount to the Trustee entitled thereto). "PURCHASE AGREEMENT" means the Purchase Agreement dated January 24, 2003 among Delta and the Initial Purchasers relating to the purchase of the Class G Certificates by the Initial Purchasers, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "RATING AGENCIES" means, collectively, at any time, each of two nationally recognized rating agencies that have been requested to rate the Certificates and that are then rating the Certificates. The initial Rating Agencies will be Moody's and S&P. "RATINGS CONFIRMATION" means, with respect to any action proposed to be taken, a written confirmation from each of the Rating Agencies that such action (without regard to the Policy in the case of the Class G Certificates) would not result in (i) a reduction of the rating for any Class of Certificates below the then current rating for such Class of Certificates or (ii) a withdrawal or suspension of the rating of any Class of Certificates. "REFERENCE AGENCY AGREEMENT" means the Reference Agency Agreement, dated as of the date hereof, among Delta, U.S. Bank, as the reference agent thereunder, the Subordination Agent and the Loan Trustee. "REGISTER", with respect to any Trust, has the meaning ascribed to such term in the Trust Agreement for such Trust. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement dated January 30, 2003 among Delta, the Initial Purchasers and the Class G Trustee. "REGULAR DISTRIBUTION DATES" means each January 25, April 25, July 25 and October 25, commencing on April 25, 2003; provided, however, that, if any such day shall not be a Business Day, the related distribution shall be made on the next succeeding Business Day. "REPLACEMENT ABOVE-CAP LIQUIDITY FACILITY" means an irrevocable interest rate cap agreement (or agreements) for the same term as the Above-Cap Liquidity Facility being replaced, in substantially the form of the Above-Cap Liquidity Facility being replaced or in such other form (which may include a letter of credit) as shall permit the Rating Agencies to issue in writing, and the Rating Agencies shall have issued in writing, a Ratings Confirmation (before the downgrading of the ratings on the Certificates, if any, as a result of any downgrading of the Above-Cap Liquidity Provider), issued by a Person (or Person(s)) having short-term unsecured debt ratings or corporate credit ratings, as the case may be, issued by Moody's and S&P that are equal to or higher than the applicable Threshold Rating (which Person will be consented to by the Policy Provider, which consent shall not be unreasonably withheld or denied). 18 "REPLACEMENT ABOVE-CAP LIQUIDITY PROVIDER" means a Person (or Persons) who issues a Replacement Above-Cap Liquidity Facility. "REPLACEMENT PRIMARY LIQUIDITY FACILITY" means, an irrevocable revolving credit agreement (or agreements) in substantially the form of the Primary Liquidity Facility being replaced, including reinstatement provisions, or in such other form (which may include a letter of credit, surety bond, financial insurance policy or guaranty) as shall permit the Rating Agencies to confirm in writing their respective ratings then in effect for the Class G Certificates (before downgrading of such ratings, if any, as a result of the downgrading, if any, of the Primary Liquidity Provider and without regard to the Policy), and, to be consented to by the Policy Provider, which consent shall not be unreasonably withheld or delayed, in a face amount (or in an aggregate face amount) equal to the Required Amount and issued by a Person (or Persons) having short-term ratings issued by both Rating Agencies that are equal to or higher than the Threshold Rating specified in clause (a) of the definition of "Threshold Rating" or if such Person (or Persons) does not have a short-term rating from a given Rating Agency, a long-term rating issued by such Rating Agency that is equal to or higher than the "Threshold Rating" specified in clause (b) of the definition of Threshold Rating. Without limitation of the form that a Replacement Primary Liquidity Facility otherwise may have pursuant to the preceding sentence, a Replacement Primary Liquidity Facility may have a stated expiration date earlier than 15 days after the Final Legal Distribution Date so long as the Replacement Primary Liquidity Facility provides for a Non-Extension Drawing as contemplated by Section 3.06(d) hereof. "REPLACEMENT PRIMARY LIQUIDITY PROVIDER" means a Person who issues a Replacement Primary Liquidity Facility. "REQUIRED AMOUNT" means, with respect to the Primary Liquidity Facility, or the Primary Cash Collateral Account, for any day, the sum of the aggregate amount of interest, calculated on the basis of a year of 360 days and actual number of days elapsed during the relevant period at the rate per annum equal to the Capped Interest Rate, that would be distributable on the Class G Certificates on each of the six successive Regular Distribution Dates immediately following such date or, if such date is a Regular Distribution Date, on such day and the succeeding five Regular Distribution Dates, in each case calculated on the basis of the Pool Balance of the Class G Certificates on such date and without regard to expected future distributions of principal on the Class G Certificates. The Pool Balance for purposes of the definition of Required Amount shall, in the event of any Policy Provider Election, be deemed to be reduced by an amount (if positive) by which (a) the outstanding principal balance of the Series G Equipment Note, in respect of which such Policy Provider Election has been made shall exceed (b) the amount of any Policy Drawings previously paid by the Policy Provider in respect of principal on such Series G Equipment Note. "RESPONSIBLE OFFICER" means (i) with respect to the Subordination Agent and each of the Trustees, any officer in the Corporate Trust Department or similar department of the Subordination Agent or such Trustee, as the case may be, or any other officer customarily performing functions similar to those performed by the persons who at the time shall be such officers or to whom any corporate trust matter is referred because of his knowledge of and familiarity with a particular subject, (ii) with respect to each Liquidity Provider, any authorized 19 officer of such Liquidity Provider and (iii) with respect to the Policy Provider, any of its authorized officers. "SCHEDULED PAYMENT" means, with respect to any Equipment Note, (i) any payment of principal or interest on such Equipment Note (other than an Overdue Scheduled Payment) or (ii) in the case of any Series G Equipment Note, any distribution in respect of interest on such Series G Equipment Note to the Class G Certificateholders with funds drawn under the Primary Liquidity Facility or withdrawn from the Primary Cash Collateral Account or the Above-Cap Account or drawn under the Policy, which payment in the case of clause (i) or clause (ii) represents the installment of principal at the stated maturity of such installment, the payment of regularly scheduled interest accrued on the unpaid principal amount of such Equipment Note, or both; provided that any payment of principal or Additional Payment, if any, or interest resulting from the redemption or purchase of any Equipment Note shall not constitute a Scheduled Payment. "SCHEDULED PAYMENT DATE" means, with respect to any Scheduled Payment, the date on which such Scheduled Payment is scheduled to be made. "SECTION 2.04(B) FRACTION" has the meaning specified in Section 2.04(b). "SERIES C EQUIPMENT NOTES" means the Series C Equipment Notes issued pursuant to each Indenture by Delta and authenticated by the Loan Trustee thereunder, and any such Equipment Notes issued in exchange therefor or replacement thereof pursuant to the terms of such Indenture. "SERIES D EQUIPMENT NOTES" means the Series D Equipment Notes issued pursuant to each Indenture by Delta and authenticated by the Loan Trustee thereunder, and any such Equipment Notes issued in exchange therefor or replacement thereof pursuant to the terms of such Indenture. "SERIES G EQUIPMENT NOTES" means the Series G Equipment Notes issued pursuant to each Indenture by Delta and authenticated by the Loan Trustee thereunder, and any such Equipment Notes issued in exchange therefor or replacement thereof pursuant to the terms of such Indenture. "SPECIAL DISTRIBUTION DATE" means, (i) with respect to any Special Payment, the Business Day chosen by the Subordination Agent pursuant to Section 2.04(a) or 3.07(b) for the distribution of such Special Payment in accordance with this Agreement, (ii) an Election Distribution Date or (iii) each other date designated in Section 3.07(c) or 3.07(e) as a Special Distribution Date. "SPECIAL PAYMENT" means any payment (other than a Scheduled Payment or a distribution referred to in Section 2.03(c)) in respect of, or any proceeds of, any Equipment Note or Collateral (as defined in each Indenture). "SPECIAL PAYMENTS ACCOUNT" means the Eligible Deposit Account created pursuant to Section 2.02(a) as a sub-account to the Collection Account. 20 "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. " "STATED AMOUNT" at any time, means the Maximum Commitment (as defined in the Primary Liquidity Facility) at such time. "STATED EXPIRATION DATE" has the meaning specified in Section 3.06(d). "STATED INTEREST RATE" for any Interest Period means (i) with respect to the Class G Certificates, LIBOR for such Interest Period plus 0.75% per annum, (ii) with respect to the Class C Certificates, LIBOR for such Interest Period plus 2.00% per annum, and (iii) with respect to the Class D Certificates, LIBOR for such Interest Period plus 2.50% per annum, plus, in the case of the Class G Certificates, an additional margin of 0.25% for any period required by the Registration Rights Agreement . "STATUTORY TRUST AGREEMENT" means the Class C Statutory Trust Agreement or the Class D Statutory Trust Agreement. "SUBORDINATION AGENT" has the meaning specified in the introductory paragraph to this Agreement. "SUBORDINATION AGENT INCUMBENCY CERTIFICATE" has the meaning specified in Section 2.05(a). "SUBORDINATION AGENT REPRESENTATIVES" has the meaning specified in Section 2.05(a). "TAX" and "TAXES" means all governmental fees (including, without limitation, license, filing and registration fees) and all taxes (including, without limitation, franchise, excise, stamp, value added, income, gross receipts, sales, use and property taxes), withholdings, assessments, levies, imposts, duties or charges, of any nature whatsoever, together with any related penalties, fines, additions to tax or interest thereon imposed, withheld, levied or assessed by any country, taxing authority or governmental subdivision thereof or therein or by any international authority, including any taxes imposed on any Person as a result of such Person being required to collect and pay over withholding taxes. "TERMINATION AMOUNT" has the meaning assigned to such term in the Above-Cap Liquidity Facility. "TERMINATION NOTICE" has the meaning specified in the Primary Liquidity Facility. "THRESHOLD RATING" means (a) a short-term unsecured debt rating of P-1 in the case of Moody's and a short-term issuer credit rating of A-1 in the case of S&P and (b) in the case of any Person who does not have such short-term rating from either or both of such Rating Agencies, then in lieu of such short-term rating from such Rating Agency or Rating Agencies, a long-term unsecured debt rating of A1 in the case of Moody's and a long-term issuer credit rating of A+ in the case of S&P. 21 "TREASURY REGULATIONS" means regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations shall include analogous provisions of final Treasury Regulations or other successor Treasury Regulations. "TRIGGERING EVENT" means (x) the occurrence of an Indenture Event of Default under all of the Indentures resulting in a PTC Event of Default with respect to the most senior Class of Certificates then Outstanding, (y) the Acceleration of all of the outstanding Equipment Notes or (z) the occurrence of a Delta Bankruptcy Event. "TRUST" means any of the Class G Trust, the Class C Trust or the Class D Trust. "TRUST ACCOUNTS" has the meaning specified in Section 2.02(a). "TRUST AGREEMENT" means any of the Class G Trust Agreement, the Class C Trust Agreement or the Class D Trust Agreement. "TRUST PROPERTY", with respect to any Trust, has the meaning specified in the Trust Agreement for such Trust. "TRUST SUPPLEMENT" means an agreement supplemental to the Basic Agreement pursuant to which (i) a separate trust is created for the benefit of the holders of Certificates of a series, (ii) the issuance of the Certificates of a series representing fractional undivided interests in such trust is authorized and (iii) the terms of the Certificates of such series are established, as such agreement may from time to time be supplemented, amended or otherwise modified. "TRUSTEE" means any of the Class G Trustee, the Class C Trustee or the Class D Trustee. "TRUSTEE INCUMBENCY CERTIFICATE" has the meaning specified in Section 2.05(b). "TRUSTEE REPRESENTATIVES" has the meaning specified in Section 2.05(b). "UNITED STATES" means the United States of America. "U.S. BANK" has the meaning specified in the introductory paragraph of this Agreement. "WITHDRAWAL NOTICE" has the meaning specified in Section 3.06(d). "WRITTEN NOTICE" means, from the Subordination Agent, any Trustee, any Liquidity Provider or the Policy Provider, a written instrument executed by the Designated Representative of such Person. An invoice delivered by the Primary Liquidity Provider pursuant to Section 3.01 in accordance with its normal invoicing procedures shall constitute Written Notice under such Section. 22 ARTICLE II TRUST ACCOUNTS; CONTROLLING PARTY Section 2.01. Agreement to Terms of Subordination; Payments from Monies Received Only. (a) Each Trustee hereby (i) acknowledges and agrees to the terms of subordination and distribution set forth in this Agreement in respect of each Class of Certificates, (ii) agrees to enforce such provisions and cause all payments in respect of the Equipment Notes, the Liquidity Facilities and the Policy to be applied in accordance with the terms of this Agreement and (iii) with respect to payments in respect of the Equipment Notes received by it, agrees to allocate such payments first, to interest payable in respect of the Certificates of the related Class, second, to Additional Payment, if any, payable in respect of the Certificates of the related Class, and third, to principal payable in respect of the Certificates of the related Class. In addition, each Trustee hereby agrees to cause the Equipment Notes purchased by the related Trust to be registered in the name of the Subordination Agent or its nominee, as agent and trustee for such Trustee, to be held in trust by the Subordination Agent solely for the purpose of facilitating the enforcement of the subordination and other provisions of this Agreement. (b) Except as otherwise expressly provided in the next succeeding sentence of this Section 2.01(b), all payments to be made by the Subordination Agent hereunder shall be made only from amounts received by it that constitute Scheduled Payments, Special Payments or other payments under the Operative Agreements, including payments under Section 4.02 of the Participation Agreements and Section 2.14 of the Indentures, and only to the extent that the Subordination Agent shall have received sufficient income or proceeds therefrom to enable it to make such payments in accordance with the terms hereof. Each of the Trustees and the Subordination Agent hereby agrees and each Certificateholder, by its acceptance of a Certificate, the Primary Liquidity Provider, by entering into the Primary Liquidity Facility, and the Policy Provider, by entering into the Policy Provider Agreement, has agreed to look solely to such amounts to the extent available for distribution to it as provided in this Agreement or the applicable Trust Agreement, as the case may be, and that none of the Trustees, Loan Trustees or the Subordination Agent is personally liable to any of them for any amounts payable or any liability under this Agreement, any Trust Agreement, the Primary Liquidity Facility, the Policy Provider Agreement or such Certificate, except (in the case of the Subordination Agent) as expressly provided herein or (in the case of the Trustees) as expressly provided herein and in each Trust Agreement or (in the case of the Loan Trustees) as expressly provided in any Operative Agreement. Notwithstanding anything to the contrary in this Agreement and in the other Operative Agreements, the Certificates do not represent indebtedness of the related Trust, and references in this Agreement and the Operative Agreements to accrued interest or principal amounts payable on the Certificates of any Class are included only for computational purposes. For purposes of such computations, the Certificates of any Class shall be deemed to be comprised of interest and principal components, with the principal component deemed to be the Pool Balance, and the interest component deemed to equal interest accruing at the Stated Interest Rate for such Class of Certificates from (i) the later of (1) the date of the issuance thereof and (2) the most recent but preceding Distribution Date to which such interest was distributed to (ii) the 23 applicable date of determination, such interest to be considered payable in arrears and to be calculated on the basis of the actual number of days elapsed over a 360-day year. Section 2.02. Trust Accounts. (a) Upon the execution of this Agreement, the Subordination Agent shall establish and maintain in its name (i) the Collection Account as an Eligible Deposit Account, bearing a designation clearly indicating that the funds deposited therein are held in trust for the benefit of the Trustees, the Certificateholders, the Primary Liquidity Provider and the Policy Provider, (ii) as a sub-account in the Collection Account, the Special Payments Account as an Eligible Deposit Account, bearing a designation clearly indicating that the funds deposited therein are held in trust for the benefit of the Trustees, the Certificateholders, the Primary Liquidity Provider and the Policy Provider, (iii) a Policy Account as an Eligible Deposit Account bearing a designation clearly indicating that the funds deposited therein are held in trust for the benefit of the Class G Certificateholders and (iv) an Above-Cap Account bearing a designation clearly indicating that the funds deposited therein are held in trust for the benefit of the Class G Trustee and the Class G Certificateholders. The Subordination Agent shall establish and maintain the Cash Collateral Accounts pursuant to and under the circumstances set forth in Section 3.06(f). Each Cash Collateral Account shall bear a designation clearly indicating that the funds deposited herein are held in trust for the benefit of the Class G Trustee and the Class G Certificateholders. Upon such establishment and maintenance under Section 3.06(f), the Collection Account, the Cash Collateral Accounts, the Policy Account and the Above-Cap Account shall constitute the "Trust Accounts" hereunder. Without limiting the foregoing, all monies credited to the Trust Accounts shall be, and shall remain, the property of the relevant Trust(s). (b) Funds on deposit in the Trust Accounts shall be invested and reinvested by the Subordination Agent in Eligible Investments selected by Delta or its designated representative if such investments are reasonably available and have maturities no later than the earlier of (i) 90 days following the date of such investment and (ii) the Business Day immediately preceding the Regular Distribution Date or the date of the related distribution pursuant to Section 2.04, as the case may be, next following the date of such investment (provided that the Subordination Agent shall invest and reinvest funds on deposit in the Above-Cap Account and Above-Cap Reserve Account in the manner specified in Schedule 2.02(b) attached hereto, subject to the foregoing limitation on the maturity of such investment); provided, however, that, following the making of a Downgrade Drawing or a Non-Extension Drawing under the Primary Liquidity Facility, the Subordination Agent shall invest and reinvest the amounts in the Primary Cash Collateral Account in Eligible Investments pursuant to the written instructions of the Primary Liquidity Provider, and provided further, however, that upon the occurrence and during the continuation of a Triggering Event, the Subordination Agent shall invest and reinvest such amounts (other than amounts in the Cash Collateral Accounts as a result of a Downgrade Drawing or a Non-Extension Drawing, which shall be governed by the foregoing proviso) in Eligible Investments in accordance with the written instructions of the Controlling Party. Unless otherwise expressly provided in this Agreement (including, without limitation, with respect to Investment Earnings on amounts on deposit in the Above-Cap Reserve Account and in the Above-Cap Account, in each case, pursuant to Section 3.06(f)), any Investment Earnings shall be deposited in the Collection Account when received by the Subordination Agent and shall be applied by the Subordination Agent in the same manner as the other amounts on deposit in the Collection Account are to be applied. The Subordination Agent's reasonable fees and expenses actually 24 incurred in making such investments and any losses incurred in such investments shall be charged against the principal amount invested. The Subordination Agent shall not be liable for any loss resulting from any investment, reinvestment or liquidation required to be made under this Agreement other than by reason of its willful misconduct or negligence. Eligible Investments and any other investment required to be made hereunder shall be held to their maturities except that any such investment may be sold (without regard to its maturity) by the Subordination Agent without instructions whenever such sale is necessary to make a distribution required under this Agreement. Uninvested funds held hereunder shall not earn or accrue interest. (c) The Subordination Agent shall possess all right, title and interest in all funds on deposit from time to time in the Trust Accounts and in all proceeds thereof (including all income thereon, except as otherwise expressly provided herein with respect to Investment Earnings). The Trust Accounts shall be held in trust by the Subordination Agent under the sole dominion and control of the Subordination Agent for the benefit of the Trustees, the Certificateholders, the Liquidity Providers and the Policy Provider, as the case may be. If, at any time, any of the Trust Accounts ceases to be an Eligible Deposit Account, the Subordination Agent shall within 10 Business Days (or such longer period, not to exceed 30 calendar days, to which the Policy Provider, the Liquidity Providers and each Rating Agency may consent) establish a new Collection Account, Special Payments Account, Policy Account, Cash Collateral Account or Above-Cap Account, as the case may be, as an Eligible Deposit Account and shall transfer any cash and/or any investments to such new Collection Account, Special Payments Account, Policy Account, Cash Collateral Account or Above-Cap Account, as the case may be. So long as the Subordination Agent is an Eligible Institution, the Trust Accounts shall be maintained with it as Eligible Deposit Accounts. Section 2.03. Deposits to the Collection Account and Special Payments Account; Certain Distributions. (a) The Subordination Agent shall, on each day when one or more Scheduled Payments are made to the Subordination Agent as holder of the Equipment Notes (other than any Scheduled Payment which by the express terms hereof is to be deposited to the Policy Account or a Cash Collateral Account), deposit in the Collection Account the aggregate amount of such Scheduled Payments. (b) The Subordination Agent shall, on each day when one or more Special Payments are made to the Subordination Agent as holder of the Equipment Notes, deposit in the Special Payments Account the aggregate amount of such Special Payments. (c) In the event that a Loan Trustee distributes to the Subordination Agent pursuant to Section 3.04 or clause "first" of Section 3.03 of any Indenture any amounts payable under clauses (b), (c), (d) or (e) of Section 2.14 of any Indenture, the Subordination Agent shall promptly deposit such amounts in the Collection Account. Notwithstanding anything to the contrary herein, the Subordination Agent will distribute promptly upon receipt thereof (or in the case of any such payment, compensation or reimbursement in respect of the Subordination Agent, will retain) (i) any indemnity payment received by it from Delta in respect of any Trustee, the Subordination Agent, any Liquidity Provider or the Policy Provider (collectively, the "PAYEES") and (ii) any compensation or reimbursement received by it from Delta or the Loan Trustee under any Operative Agreement in respect of any Payee (including, without limitation, 25 any fees payable to the Primary Liquidity Provider under Section 2.03 of the Primary Liquidity Facility, any premium payable to the Policy Provider under the Policy Provider Agreement or other amounts referred to in clauses (a), (c), (d) or (e) of Section 2.14 of any Indenture), in any such case directly to the Payee entitled thereto, provided that if such Payee has previously received from the Collection Account such payment, compensation or reimbursement, then the Subordination Agent shall deposit such amount in the Collection Account. Section 2.04. Distributions of Special Payments. (a) Notice of Special Payment. Upon receipt by the Subordination Agent, as registered holder of the Equipment Notes, of any notice of a Special Payment (or, in the absence of any such notice, upon receipt by the Subordination Agent of a Special Payment), the Subordination Agent shall promptly give notice thereof to each Trustee, the Primary Liquidity Provider and the Policy Provider. The Subordination Agent shall promptly calculate the amount of the prepayment (including upon Acceleration), redemption or purchase of Equipment Notes or the amount of any Overdue Scheduled Payment or the proceeds of any Collateral, as the case may be, comprising such Special Payment under the applicable Indenture or Indentures and shall promptly send to each Trustee, the Primary Liquidity Provider and the Policy Provider a Written Notice of such amount and the amount allocable to each Trust. Such Written Notice shall also set the distribution date for such Special Payment, which shall be the first Business Day that follows the later to occur of (x) the 15th day after the date of such Written Notice or (y) the date the Subordination Agent has received or expects to receive such Special Payment. Amounts on deposit in the Special Payments Account shall be distributed in accordance with Sections 2.04(b) and 2.04(c) hereof, as applicable. (b) Redemptions, Purchases and Prepayments of Equipment Notes. (i) So long as no Triggering Event shall have occurred (whether or not continuing), the Subordination Agent shall make distributions pursuant to this Section 2.04(b) of amounts on deposit in the Special Payments Account on account of the redemption, purchase (including, without limitation, a purchase resulting from a sale of the Equipment Notes permitted by Article IV) or prepayment (including upon Acceleration) of all of the Equipment Notes issued pursuant to an Indenture on the Special Distribution Date for such Special Payment in the following order of priority: (i) first, such amount as shall be required to pay (A) all accrued and unpaid Liquidity Expenses and Policy Expenses then in arrears plus (B) the product of (x) the aggregate amount of all accrued and unpaid Liquidity Expenses and Policy Expenses not in arrears to such Special Distribution Date multiplied by (y) a fraction, the numerator of which is the aggregate outstanding principal amount of Equipment Notes being redeemed, purchased or prepaid on such Special Distribution Date and the denominator of which is the aggregate outstanding principal amount of all Equipment Notes (the "SECTION 2.04(B) FRACTION"), shall be distributed to the Primary Liquidity Provider and the Policy Provider first in satisfaction of any amounts in arrears and then in satisfaction of any amounts not in arrears, pro rata on the basis of the amount of Liquidity Expenses and Policy Expenses owed to the Primary Liquidity Provider and the Policy Provider, respectively; (ii) second, such amount as shall be required to pay (i) (A) all accrued and unpaid interest (including interest accrued and unpaid on any Interest Drawing or any 26 Applied Provider Advance (as defined in the Primary Liquidity Facility)) then in arrears on all Liquidity Obligations (determined after giving effect to payments, if any, made by the Policy Provider to the Primary Liquidity Provider, in respect of interest on drawings under the Primary Liquidity Facility) plus (B) the aggregate amount of all accrued and unpaid interest on all Liquidity Obligations not in arrears to such Special Distribution Date (at the rate provided in the Primary Liquidity Facility) (determined after giving effect to payments, if any, made by the Policy Provider to the Primary Liquidity Provider, in respect of interest on drawings under the Primary Liquidity Facility), (ii) if the Primary Liquidity Provider has defaulted in its obligation to make any Interest Drawing, (A) the aggregate amount of interest accrued on the portion of any Policy Drawing made to cover the shortfall attributable to such default by the Primary Liquidity Provider at the rate provided in the "except" clause of clause (ii) of the definition of "Policy Provider Obligations" which is then in arrears plus (B) the aggregate amount of all accrued and unpaid interest on such Policy Drawings not in arrears to such Special Distribution Date, and (iii) if the Policy Provider has elected to pay to the Primary Liquidity Provider all outstanding drawings and interest owing to the Primary Liquidity Provider under the Primary Liquidity Facility pursuant to Section 2.06(c) hereof, the amount of such payment made to the Primary Liquidity Provider attributable to such interest accrued on such drawings, shall be distributed to the Primary Liquidity Provider and the Policy Provider, pro rata on the basis of the amount of such Liquidity Obligations owed to the Primary Liquidity Provider and the amount of such unreimbursed Policy Provider Obligations payable to the Policy Provider under this clause "second"; (iii) third, such amount as shall be required (A) if the Primary Cash Collateral Account has been previously funded as provided in Section 3.06(f), to fund the Primary Cash Collateral Account up to the Required Amount shall be deposited in the Primary Cash Collateral Account, (B) if the Primary Liquidity Facility shall have become a Downgraded Facility or a Non-Extended Facility at a time when unreimbursed Interest Drawings under the Primary Liquidity Facility have reduced the Maximum Available Commitment thereunder to zero, to deposit into the Primary Cash Collateral Account an amount equal to the Required Amount shall be deposited in the Primary Cash Collateral Account, (C) if, neither subclause (A) nor subclause (B) of this clause "third" is applicable, to pay or reimburse the Primary Liquidity Provider in an amount equal to the amount of any unreimbursed Interest Drawings shall be distributed to the Primary Liquidity Provider (other than amounts payable pursuant to clause "first" or "second" of this Section 2.04(b) and as determined after giving effect to payments made by the Policy Provider to the Primary Liquidity Provider in respect of principal of drawings under the Primary Liquidity Facility), pro rata with any amount distributable pursuant to subclause (D) of this clause "third" on the basis of the amount of all such unreimbursed Interest Drawings and unreimbursed Policy Provider Obligations payable to the Policy Provider under subclause (D) of this clause "third" and (D) if the Policy Provider has elected to pay to the Primary Liquidity Provider all outstanding drawings and interest owing to the Primary Liquidity Provider under the Primary Liquidity Facility pursuant to Section 2.06(c) hereof, to reimburse the Policy Provider for the principal amount of such payment made to the Primary Liquidity Provider, shall be distributed to the Policy Provider, but only after giving effect to the application of amounts, if any, under subclause (A) or (B) of this clause "third", and if any amount shall be distributable under subclause (C) of this 27 clause "third", pro rata with any amount distributable pursuant to such subclause (C) on the basis of the amounts of all such unreimbursed Interest Drawings and the amount of such unreimbursed Policy Provider Obligations payable to the Policy Provider under this clause "third"; (iv) fourth, if, with respect to the Primary Liquidity Facility, any amounts are to be distributed pursuant to either subclause (A) or (B) of clause "third" above, then the Primary Liquidity Provider shall be paid the excess of (x) the aggregate outstanding amount of unreimbursed Advances (whether or not then due) under the Primary Liquidity Facility over (y) the Required Amount; (v) fifth, if the Above-Cap Reserve Account had been previously funded as provided in Section 3.06(f), such amount as shall be required to fund the Above-Cap Reserve Account up to an amount equal to the Termination Amount (as recalculated on such Distribution Date) less any amount then on deposit in the Above-Cap Account shall be deposited in the Above-Cap Reserve Account; (vi) sixth, if any Class G Certificates are Outstanding on such Special Distribution Date, such amount as shall be required to pay in full Expected Distributions to the holders of Class G Certificates on such Special Distribution Date shall be distributed to the Class G Trustee; (vii) seventh, such amount as shall be required to pay all Policy Provider Obligations then due (other than amounts payable pursuant to the preceding clauses of this Section 2.04(b) and other than any Policy Provider Interest Amounts) to the Policy Provider; (viii) eighth, such amount as shall be required to pay (x) Excess Reimbursement Obligations and Policy Provider Interest Amounts to the Policy Provider and (y) the product of any amounts due under the Policy Fee Letter multiplied by the Section 2.04(b) Fraction; (ix) ninth, if any Class C Certificates are Outstanding on such Special Distribution Date, such amount as shall be required to pay in full Expected Distributions to the holders of Class C Certificates on such Special Distribution Date shall be distributed to the Class C Trustee, provided that once all of the beneficial interest in the Initial Class C Holder has been transferred to an entity other than Delta or any of its Affiliates, the Expected Distributions on the Class C Certificates shall be distributed prior to the payment of Excess Reimbursement Obligations, Policy Provider Interest Amounts and amounts due under the Policy Fee Letter to the Policy Provider as provided in the preceding clause "eighth"; (x) tenth, if any Class D Certificates are Outstanding on such Special Distribution Date, such amount as shall be required to pay in full Expected Distributions to holders of Class D Certificates on such Special Distribution Date shall be distributed to the Class D Trustee; 28 (xi) eleventh, such amount as shall be required, if the Above-Cap Reserve Account had been previously funded as provided in Section 3.06(f), to fund the Above-Cap Reserve Account up to an amount equal to the Termination Amount (as recalculated on such Distribution Date) shall be deposited in the Above-Cap Reserve Account; and (xii) twelfth, the balance, if any, of such Special Payment shall be deposited in the Collection Account. For the purposes of this Section 2.04(b), clause (x) of the definition of "Expected Distributions" shall be deemed to read as follows: "(x) accrued, due and unpaid interest in respect of such Certificates together with (without duplication) accrued and unpaid interest in respect of a portion of the outstanding Pool Balance of such Certificates equal to the outstanding principal amount of Equipment Notes being redeemed, purchased or prepaid (immediately prior to such redemption, purchase or prepayment)". (ii) Upon the occurrence of a Triggering Event (whether or not continuing), the Subordination Agent shall make distributions pursuant to this Section 2.04(b) of amounts on deposit in the Special Payments Account on account of the redemption, purchase or prepayment of the Equipment Notes issued pursuant to an Indenture on the Special Distribution Date for such Special Payment in accordance with Section 3.03. (c) Other Special Payments. Any amounts on deposit in the Special Payments Account other than in respect of amounts to be distributed pursuant to Section 2.04(b) shall be distributed on the Special Distribution Date therefor in accordance with Article III. (d) Investment of Amounts in Special Payments Account. Any amounts on deposit in the Special Payments Account prior to the distribution thereof pursuant to Section 2.04(b) or 2.04(c) shall be invested in accordance with Section 2.02(b). Investment Earnings on such investments shall be distributed in accordance with Section 2.04(b) or 2.04(c), as the case may be. Section 2.05. Designated Representatives. (a) With the delivery of this Agreement, the Subordination Agent shall furnish to each Liquidity Provider, the Policy Provider and each Trustee, and from time to time thereafter may furnish to each Liquidity Provider, the Policy Provider and each Trustee, at the Subordination Agent's discretion, or upon any Liquidity Provider's, the Policy Provider's or Trustee's request (which request shall not be made more than one time in any 12-month period), a certificate (a "SUBORDINATION AGENT INCUMBENCY CERTIFICATE") of a Responsible Officer of the Subordination Agent certifying as to the incumbency and specimen signatures of the officers of the Subordination Agent and the attorney-in-fact and agents of the Subordination Agent (the "SUBORDINATION AGENT REPRESENTATIVES") authorized to give Written Notices on behalf of the Subordination Agent hereunder. Until each Liquidity Provider, the Policy Provider and each Trustee receives a subsequent Subordination Agent Incumbency Certificate, it shall be entitled to rely on the last Subordination Agent Incumbency Certificate delivered to it hereunder. (b) With the delivery of this Agreement, each Trustee shall furnish to the Subordination Agent, and from time to time thereafter may furnish to the Subordination Agent, 29 at such Trustee's discretion, or upon the Subordination Agent's request (which request shall not be made more than one time in any 12-month period), a certificate (with respect to each such Trustee, a "TRUSTEE INCUMBENCY CERTIFICATE") of a Responsible Officer of such Trustee certifying as to the incumbency and specimen signatures of the officers of such Trustee and the attorney-in-fact and agents of such Trustee (with respect to each such Trustee, the "TRUSTEE REPRESENTATIVES") authorized to give Written Notices on behalf of such Trustee hereunder. Until the Subordination Agent receives a subsequent Trustee Incumbency Certificate from a Trustee, it shall be entitled to rely on the last Trustee Incumbency Certificate with respect to such Trustee delivered to it hereunder. (c) With the delivery of this Agreement, each Liquidity Provider shall furnish to the Subordination Agent, and from time to time thereafter may furnish to the Subordination Agent, at such Liquidity Provider's discretion, or upon the Subordination Agent's request (which request shall not be made more than one time in any 12-month period), a certificate (with respect to each such Liquidity Provider, a "LIQUIDITY PROVIDER INCUMBENCY CERTIFICATE") of a Responsible Officer of such Liquidity Provider certifying as to the incumbency and specimen signatures of the officers of such Liquidity Provider and the attorney-in-fact and agents of such Liquidity Provider (with respect to each such Liquidity Provider, the "LIQUIDITY PROVIDER REPRESENTATIVES") authorized to give Written Notices on behalf of such Liquidity Provider hereunder. Until the Subordination Agent receives a subsequent Liquidity Provider Incumbency Certificate, it shall be entitled to rely on the last Liquidity Provider Incumbency Certificate delivered to it hereunder. (d) With the delivery of this Agreement, the Policy Provider shall furnish to the Subordination Agent, and from time to time thereafter may furnish to the Subordination Agent, at the Policy Provider's discretion, or upon the Subordination Agent's request (which request shall not be made more than one time in any 12-month period), a certificate (a "POLICY PROVIDER INCUMBENCY CERTIFICATE") of a Responsible Officer of the Policy Provider certifying as to the incumbency and specimen signatures of the officers of the Policy Provider and the attorney-in-fact and agents of the Policy Provider (the "POLICY PROVIDER REPRESENTATIVES") authorized to give Written Notices on behalf of the Policy Provider hereunder. Until the Subordination Agent receives a subsequent Policy Provider Incumbency Certificate, it shall be entitled to rely on the last Policy Provider Incumbency Certificate delivered to it hereunder. Section 2.06. Controlling Party. (a) The Trustees, the Liquidity Providers and the Policy Provider hereby agree that, subject to Section 8.01(b), with respect to any Indenture at any given time, the Loan Trustee thereunder will be directed in taking, or refraining from taking, any action under such Indenture or with respect to the Equipment Notes issued thereunder, including exercising remedies thereunder (including Accelerating the Equipment Notes issued thereunder or foreclosing the Lien created thereunder on the Aircraft securing such Equipment Notes), by the Subordination Agent as directed by the Controlling Party. (b) Subject to subparagraph (c) below, if Final Distributions have not been fully paid to the holders of Class G Certificates or if any obligations payable to the Policy Provider hereunder remain outstanding, so long as no Policy Provider Default has occurred and is continuing, the Policy Provider shall be the Controlling Party. At any other time the Controlling Party shall be : (i) if Final Distributions have not been fully paid to the holders of Class G 30 Certificates, the Class G Trustee; (ii) if Final Distributions have been fully paid to the holders of Class G Certificates, but not to the holders of the Class C Certificates, the Class C Trustee; and (iii) if Final Distributions have been fully paid to the holders of Class G Certificates and Class C Certificates, the Class D Trustee. For purposes of giving effect to the foregoing, the Trustees (other than the Controlling Party) irrevocably agree (and the Certificateholders (other than the Certificateholders represented by the Controlling Party) shall be deemed to agree by virtue of their purchase of Certificates) that the Subordination Agent, as record holder of the Equipment Notes, shall exercise its voting rights in respect of the Equipment Notes as directed by the Controlling Party and any vote so exercised shall be binding upon the Trustees and all Certificateholders. The Subordination Agent shall give written notice to all of the other parties to this Agreement promptly upon a change in the identity of the Controlling Party. Each of the parties hereto agrees that it shall not exercise any of the rights of the Controlling Party at such time as it is not the Controlling Party hereunder; provided, however, that nothing herein contained shall prevent or prohibit any Non-Controlling Party from exercising such rights as shall be specifically granted to such Non-Controlling Party hereunder and under the other Operative Agreements. (c) Notwithstanding the foregoing, at any time after 18 months from the earliest to occur of (i) the date on which the entire Maximum Available Commitment under the Primary Liquidity Facility shall have been drawn (for any reason other than a Downgrade Drawing or a Non-Extension Drawing) and remain unreimbursed, (ii) the date on which the entire amount of any Downgrade Drawing or Non-Extension Drawing under the Primary Liquidity Facility shall have become and remain "Applied Downgrade Advances" or "Applied Non-Extension Advances", as the case may be, under and as defined in the Primary Liquidity Facility or, if earlier, the date on which the entire amount of any Downgrade Drawing or Non-Extension Drawing is converted into a Final Drawing and which in each case, remains unreimbursed and (iii) the date on which all Equipment Notes under all Indentures shall have been Accelerated (provided that in the event of a bankruptcy proceeding under the Bankruptcy Code in which Delta is a debtor, any amounts payable in respect of Equipment Notes which have become immediately due and payable by declaration or otherwise shall not be considered Accelerated for purposes of this subclause (iii) until the expiration of the 60-day period under Section 1110(a)(2)(A) of the Bankruptcy Code or such longer period as may apply under Section 1110(a)(2)(B) or Section 1110(b) of the Bankruptcy Code), the Primary Liquidity Provider shall have the right to elect, by Written Notice to the Subordination Agent, the Policy Provider and each of the Trustees, to become the Controlling Party hereunder with respect to any Indenture at any time from and including the last day of such 18-month period, provided that if, within 15 Business Days after its receipt of any such Written Notice from the Primary Liquidity Provider (which notice may be given on or after the fifteenth Business Day prior to the end of such 18-month period) the Policy Provider pays to the Primary Liquidity Provider all outstanding drawings owing to the Primary Liquidity Provider in respect of the Primary Liquidity Facility, and interest accrued thereon to such date, the Policy Provider shall remain the Controlling Party so long as (x) no Policy Provider Default has occurred and is continuing and (y) the Policy Provider thereafter pays to the Primary Liquidity Provider all subsequent Drawings, together with accrued interest thereon, under the Primary Liquidity Facility as and when such obligations become due (which payments shall be applied by the Primary Liquidity Provider as repayments of such Drawings and accrued interest thereon), provided, further, however, that upon any such 31 Policy Provider Default or the failure to comply with clause (y) of this Section 2.06(c), the Primary Liquidity Provider, if it so elects and if Liquidity Obligations owing to it remain outstanding, or if it does not so elect or if no Liquidity Obligations owing to it remain outstanding, the Person determined to be the Controlling Party in accordance with Section 2.06(b), shall become the Controlling Party. (d) The exercise of remedies by the Controlling Party under this Agreement shall be expressly limited by Section 4.01(a)(ii) and 8.01(b). (e) The Controlling Party shall not be entitled to require or obligate any Non-Controlling Party to provide funds necessary to exercise any right or remedy hereunder. (f) Notwithstanding anything contained herein, neither the Controlling Party nor the Subordination Agent shall be authorized or empowered to do anything that would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED Section 3.01. Written Notice of Distribution. (a) Prior to the occurrence of a Triggering Event, no later than 3:00 p.m. (New York City time) on the Business Day immediately preceding each Regular Distribution Date (or Special Distribution Date for purposes of Section 2.04(b), as the case may be), each of the following Persons shall deliver to the Subordination Agent a Written Notice setting forth the following information as at the close of business on such Business Day: (i) With respect to the Class G Certificates, if any are then Outstanding, the Class G Trustee shall separately set forth the amounts to be paid in accordance with clause "sixth" of Section 3.02 or 2.04(b), as the case may be (without giving effect to the pro rata sharing therein); (ii) With respect to the Class C Certificates, if any are then Outstanding, the Class C Trustee shall separately set forth the amounts to be paid in accordance with clause "ninth" of Section 3.02 or 2.04(b), as the case may be; (iii) With respect to the Class D Certificates, if any are then Outstanding, the Class D Trustee shall separately set forth the amounts to be paid in accordance with clause "tenth" of Section 3.02 or 2.04(b), as the case may be; (iv) With respect to the Primary Liquidity Facility, the Primary Liquidity Provider shall separately set forth the amounts to be paid in accordance with clauses "first", "second", "third" and "fourth" of Section 3.02 or 2.04(b), as the case may be; and (v) The Policy Provider shall set forth the amounts to be paid to it in accordance with clauses "first", "second" and "third" of Section 2.04(b) or Section 3.02, as the case may be; and 32 (vi) Each Trustee shall set forth the amounts to be paid in accordance with clause "eleventh" of Section 3.02. The notices required under this Section 3.01(a) may be in the form of a schedule or similar document provided to the Subordination Agent by the parties referenced therein or by any one of them, which schedule or similar document may state that, unless there has been a redemption, purchase or prepayment of the Equipment Notes, such schedule or similar document is to remain in effect until any substitute notice or amendment shall be given to the Subordination Agent by the party providing such notice. (b) Following the occurrence of a Triggering Event (whether or not continuing), the Subordination Agent shall request the following information from the following Persons, and may from time to time thereafter again request such information from such Persons, and each of the following Persons shall, within five Business Days of such request of the Subordination Agent, deliver a Written Notice to the Subordination Agent setting forth for such Person the following information: (i) With respect to the Class G Certificates, if any are then Outstanding, the Class G Trustee shall separately set forth the amounts to be paid in accordance with clauses "first" (to reimburse payments made by the Class G Certificateholders pursuant to subclause (D) of clause "first" of Section 3.03), "seventh" (to reimburse payments made by the Class G Certificateholders pursuant to subclause (C) of clause "seventh" of Section 3.03 without giving effect to the pro rata sharing specified therein) and "eighth" of Section 3.03; (ii) With respect to the Class C Certificates, if any are then Outstanding, the Class C Trustee shall separately set forth the amounts to be paid in accordance with clauses "first" (to reimburse payments made by the Class C Certificateholders pursuant to subclause (D) of clause "first" of Section 3.03), "seventh" (to reimburse payments made by the Class C Certificateholders pursuant to subclause (C) of clause "seventh" of Section 3.03) and "eleventh" of Section 3.03; (iii) With respect to the Class D Certificates, if any are then Outstanding, the Class D Trustee shall separately set forth the amounts to be paid in accordance with clauses "first" (to reimburse payments made by the Class D Certificateholders pursuant to subclause (D) of clause "first" of Section 3.03), "seventh" (to reimburse payments made by the Class D Certificateholders pursuant to subclause (C) of clause "seventh" of Section 3.03) and "twelfth" of Section 3.03; (iv) With respect to the Primary Liquidity Facility, the Primary Liquidity Provider shall separately set forth the amounts to be paid to it in accordance with subclause (iv) of clause "first" of Section 3.03 and clauses "second", "third", "fourth" and "fifth" of Section 3.03; (v) The Policy Provider shall separately set forth amounts to be paid to it in accordance with subclause (C) and (D) of clause "first" of Section 3.03 and clauses "second", "third", "fourth", "ninth" and "tenth" of Section 3.03; and 33 (vi) Each Trustee shall set forth the amounts to be paid in accordance with subclause (B) of clause "first" of Section 3.03 and subclause (B) of clause "seventh" of Section 3.03. (c) At such time as a Trustee, the Primary Liquidity Provider or the Policy Provider shall have received all amounts owing to it (and, in the case of a Trustee, the Certificateholders for which it is acting) pursuant to Section 2.04, 3.02, 3.03 or 3.07, as applicable, and, in the case of the Primary Liquidity Provider or the Policy Provider, its commitment under the Primary Liquidity Facility or the Policy shall have terminated or expired, such Person shall, by a Written Notice, so inform the Subordination Agent and each other party to this Agreement. (d) As provided in Section 6.05, the Subordination Agent shall be fully protected in relying on any of the information set forth in a Written Notice provided by any Trustee, the Primary Liquidity Provider or the Policy Provider pursuant to Sections 3.01(a), 3.01(b) and 3.01(c) above and shall have no independent obligation to verify, calculate or recalculate any amount set forth in any Written Notice delivered in accordance with such paragraphs. (e) Any Written Notice delivered by a Trustee, the Primary Liquidity Provider or the Policy Provider, as applicable, pursuant to Section 3.01(a), 3.01(b) or 3.01(c), if made prior to 10:00 a.m. (New York City time) on a given date that is a Business Day shall be effective on the date delivered (or if delivered later on such date or on a day that is not a Business Day shall be effective as of the next Business Day). Subject to the terms of this Agreement, the Subordination Agent shall as promptly as practicable comply with any such instructions; provided, however, that any transfer of funds pursuant to any instruction received after 10:00 a.m. (New York City time) on any Business Day may be made on the next succeeding Business Day. (f) In the event the Subordination Agent shall not receive from any Person any information set forth in Section 3.01(a) or 3.01(b) that is required to enable the Subordination Agent to make a distribution to such Person pursuant to Section 2.04(b), 3.02 or 3.03, the Subordination Agent shall not make such distribution(s) to such Person. In such event, the Subordination Agent shall make distributions pursuant to clauses "first" through "twelfth" of Section 2.04(b), clauses "first" through "thirteenth" of Section 3.02 and clauses "first" through "fourteenth" of Section 3.03 to the extent it shall have sufficient information to enable it to make such distributions, and shall continue to hold any funds remaining, after making such distributions, on the terms hereof (including Section 2.02(b)) until the Subordination Agent shall receive all necessary information to enable it to distribute any funds so withheld, and upon receipt of the information necessary to distribute any funds so withheld, the Subordination Agent shall distribute such funds. (g) On such dates (but not more frequently than monthly) as the Primary Liquidity Provider, the Policy Provider or any Trustee shall request, but in any event automatically at the end of each calendar quarter, the Subordination Agent shall send to such party a written statement reflecting all amounts on deposit with the Subordination Agent pursuant to Section 3.01(f). 34 Section 3.02. Distribution of Amounts on Deposit in the Collection Account. Except as otherwise provided in Sections 2.04, 3.01(f), 3.03, 3.04 and 3.06(b), amounts on deposit in the Collection Account (or, in the case of any amount described in Section 2.04(c), on deposit in the Special Payments Account) shall be promptly distributed on each Regular Distribution Date (or, in the case of any amount described in Section 2.04(c), on the Special Distribution Date thereof) in the following order of priority and in accordance with the information provided to the Subordination Agent pursuant to Section 3.01(a): (i) first, such amount as shall be required to pay in full (A) all accrued and unpaid Liquidity Expenses owed to the Primary Liquidity Provider and (B) all accrued and unpaid Policy Expenses owed to the Policy Provider, shall be distributed to the Primary Liquidity Provider and the Policy Provider, pro rata on the basis of the amount of Liquidity Expenses owed to the Primary Liquidity Provider and Policy Expenses owed to the Policy Provider; (ii) second, such amount as shall be required to pay (A) accrued and unpaid interest on the Liquidity Obligations as provided in the Primary Liquidity Facility (determined after giving effect to payments made by the Policy Provider to the Primary Liquidity Provider, if any, in respect of interest on drawings under the Primary Liquidity Facility in accordance with the provisions of Section 2.06(c)), (B) if the Primary Liquidity Provider has defaulted in its obligation to make any Interest Drawing in respect of the Class G Certificates, the aggregate amount of interest accrued on the portion of any Policy Drawing made to cover the shortfall attributable to such default by the Primary Liquidity Provider at the rate provided in the "except" clause of clause (ii) of the definition of "Policy Provider Obligations" and (C) if the Policy Provider has elected to pay to the Primary Liquidity Provider all outstanding drawings and interest owing to the Primary Liquidity Provider under the Primary Liquidity Facility pursuant to subsection 2.06(c) hereof, the amount of such payment made to the Primary Liquidity Provider attributable to such interest accrued on such drawings, shall be distributed to the Primary Liquidity Provider and the Policy Provider, pro rata on the basis of the amount of such Liquidity Obligations owed to the Primary Liquidity Provider and the amount of such Policy Provider Obligations payable to the Policy Provider under this clause "second"; (iii) third, such amount as shall be required (A) if the Primary Cash Collateral Account has been previously funded as provided in Section 3.06(f), to fund the Primary Cash Collateral Account up to its Required Amount shall be deposited in the Primary Cash Collateral Account, (B) if the Primary Liquidity Facility shall have become a Downgraded Facility or a Non-Extended Facility at a time when unreimbursed Interest Drawings under the Primary Liquidity Facility have reduced the Maximum Available Commitment thereunder to zero, to deposit into the Primary Cash Collateral Account an amount equal to the Required Amount shall be deposited in the Primary Cash Collateral Account, (C) if, with respect to the Primary Liquidity Facility, neither subclause (A) nor subclause (B) of this clause "third" is applicable, to pay or reimburse the Primary Liquidity Provider in an amount equal to the amount of all Liquidity Obligations then due under the Primary Liquidity Facility shall be distributed to the Primary Liquidity Provider (other than amounts payable pursuant to clause "first" or "second" of this Section 3.02 and as determined after giving effect to payments made by the Policy Provider to the 35 Primary Liquidity Provider in respect of principal of drawings under the Primary Liquidity Facility), pro rata with any amount distributable pursuant to subclause (D) of this clause "third" on the basis of the amount of all such unreimbursed Liquidity Obligations and unreimbursed Policy Provider Obligations payable to the Policy Provider under subclause (D) of this clause "third" and (D) if the Policy Provider has elected to pay to the Primary Liquidity Provider all outstanding drawings and interest thereon owing to the Primary Liquidity Provider under the Primary Liquidity Facility pursuant to Section 2.06(c) hereof, to reimburse the Policy Provider for the principal amount of such payment made to the Primary Liquidity Provider, shall be distributed to the Policy Provider, but only after giving effect to the application of amounts, if any, under subclause (A) or (B) of this clause "third", and if any amount shall be distributable under subclause (C) of this clause "third", pro rata (without duplication) with any amount distributable pursuant to such subclause (C), on the basis of the amounts of all such unreimbursed Liquidity Obligations and the amount of such unreimbursed Policy Provider Obligations payable to the Policy Provider under this clause "third"; (iv) fourth, if, with respect to the Primary Liquidity Facility and the Primary Cash Collateral Account, any amounts are to be distributed pursuant to either subclause (A) or (B) of clause "third" above, then the Primary Liquidity Provider with respect to the Primary Liquidity Facility shall be paid the excess of (x) the aggregate outstanding amount of unreimbursed Advances (whether or not then due) under the Primary Liquidity Facility over (y) the Required Amount; (v) fifth, if the Above-Cap Reserve Account had been previously funded as provided in Section 3.06(f), such amount as shall be required to fund the Above-Cap Reserve Account up to an amount equal to the Termination Amount (as recalculated on such Distribution Date) less any amount then on deposit in the Above-Cap Account shall be deposited in the Above-Cap Reserve Account; (vi) sixth, if any Class G Certificates are Outstanding on such Distribution Date, such amount as shall be required to pay in full Expected Distributions to the holders of the Class G Certificates on such Distribution Date shall be distributed to the Class G Trustee; (vii) seventh, such amount as shall be required to pay the Policy Provider all Policy Provider Obligations then due (other than amounts payable pursuant to the preceding clauses of this Section 3.02 and other than any Policy Provider Interest Amounts) shall be distributed to the Policy Provider; (viii) eighth, such amount as shall be required to pay in full any Excess Reimbursement Obligations, any Policy Provider Interest Amounts and any amounts due under the Policy Fee Letter shall be distributed to the Policy Provider; (ix) ninth, if any Class C Certificates are Outstanding on such Distribution Date, such amount as shall be required to pay in full Expected Distributions to the holders of the Class C Certificates on such Distribution Date shall be distributed to the Class C Trustee, provided that once all of the beneficial interest in the Initial Class C Holder has 36 been transferred to an entity other than Delta or any of its Affiliates, the Expected Distributions on the Class C Certificates shall be distributed prior to the payment of Excess Reimbursement Obligations, Policy Provider Interest Amounts and amounts due under the Policy Fee Letter to the Policy Provider as provided in the preceding clause "eighth"; (x) tenth, if any Class D Certificates are Outstanding on such Distribution Date, such amount as shall be required to pay in full Expected Distributions to holders of Class D Certificates on such Distribution Date shall be distributed to the Class D Trustee; (xi) eleventh, such amount as shall be required to pay in full (without duplication of any amounts otherwise payable hereunder or under any Operative Agreement) the aggregate unpaid amount of fees and expenses payable as of such Distribution Date to the Subordination Agent and each Trustee pursuant to the terms of this Agreement and the Trust Agreements, as the case may be, shall be distributed to the Subordination Agent and such Trustee; (xii) twelfth, such amount as shall be required, if the Above-Cap Reserve Account had been previously funded as provided in Section 3.06(f), to fund the Above-Cap Reserve Account up to an amount equal to the Termination Amount (as recalculated on such Distribution Date) shall be deposited in the Above-Cap Reserve Account; and (xiii) thirteen, the balance, if any, of any such amount remaining thereafter shall be held in the Collection Account for later distribution in accordance with this Article III. Section 3.03. Distribution of Amounts on Deposit Following a Triggering Event. Except as otherwise provided in Sections 3.01(f) and 3.06(b), upon the occurrence of a Triggering Event and at all times thereafter, all funds in the Collection Account or the Special Payments Account shall be promptly distributed by the Subordination Agent in the following order of priority: (i) first, such amount as shall be required to reimburse (A) the Subordination Agent for any reasonable out-of-pocket costs and expenses actually incurred by it (to the extent not previously reimbursed) in the protection of, or the realization of the value of, the Equipment Notes or any Collateral, shall be applied by the Subordination Agent in reimbursement of such costs and expenses, (B) each Trustee for any amounts of the nature described in clause (A) above actually incurred by it under the applicable Trust Agreement (to the extent not previously reimbursed), shall be distributed to such Trustee, (C) the Policy Provider for any amounts of the nature described in clause (A) above actually incurred by it (to the extent not previously reimbursed), shall be distributed to the Policy Provider, and (D) the Primary Liquidity Provider, the Policy Provider or Certificateholder for payments, if any, made by it to the Subordination Agent or any Trustee in respect of amounts described in clause (A) above, shall be distributed to the Primary Liquidity Provider, the Policy Provider or the applicable Trustee for the account of such Certificateholder, in each such case, pro rata on the basis of all amounts described in clauses (A) through (D) above; 37 (ii) second, such amount as shall be required to pay (A) all accrued and unpaid Liquidity Expenses and (B) all accrued and unpaid Policy Expenses shall be distributed to the Primary Liquidity Provider and the Policy Provider, pro rata on the basis of the amount of Liquidity Expenses and Policy Expenses owed to the Primary Liquidity Provider and the Policy Provider; (iii) third, such amount as shall be required to pay (A) accrued and unpaid interest on the Liquidity Obligations as provided in the Primary Liquidity Facility (determined after giving effect to payments made by the Policy Provider to the Primary Liquidity Provider, if any, in respect of interest on drawings under the Primary Liquidity Facility in accordance with Section 2.06(c)), (B) if the Primary Liquidity Provider has defaulted in its obligation to make any Interest Drawing in respect of the Class G Certificates, the aggregate amount of interest accrued on the portion of any Policy Drawing made to cover the shortfall attributable to such default by the Primary Liquidity Provider at the rate provided in the "except" clause of clause (ii) of the definition of "Policy Provider Obligations" and (C) if the Policy Provider has elected to pay to the Primary Liquidity Provider all outstanding drawings and interest owing to the Primary Liquidity Provider under the Primary Liquidity Facility pursuant to Section 2.06(c) hereof, the amount of such payment made to the Primary Liquidity Provider attributable to such interest accrued on such drawings, shall be distributed to the Primary Liquidity Provider and the Policy Provider, pro rata (without duplication) on the basis of the amount of such Liquidity Obligations owed to the Primary Liquidity Provider and the amount of such Policy Provider Obligations payable to the Policy Provider under this clause "third"; (iv) fourth, such amount as shall be required (A) if any Primary Cash Collateral Account has been previously funded as provided in Section 3.06(f), unless (1) a Performing Note Deficiency exists and a Liquidity Event of Default shall have occurred and be continuing with respect to the Primary Liquidity Facility or (2) a Final Drawing shall have occurred with respect to the Primary Liquidity Facility, to fund the Primary Cash Collateral Account up to its Required Amount (less the amount of any repayments of Interest Drawings under the Primary Liquidity Facility while subclause (A)(1) above is applicable) shall be deposited in the Primary Cash Collateral Account, (B) if the Primary Liquidity Facility shall have become a Downgraded Facility or a Non-Extended Facility at a time when unreimbursed Interest Drawings under the Primary Liquidity Facility have reduced the Maximum Available Commitment thereunder to zero, unless (1) a Performing Note Deficiency exists and a Liquidity Event of Default shall have occurred and be continuing with respect to the Primary Liquidity Facility or (2) a Final Drawing shall have occurred with respect to the Primary Liquidity Facility, to deposit into the Primary Cash Collateral Account an amount equal to the Required Amount (less the amount of any repayments of Interest Drawings under the Primary Liquidity Facility while subclause (B)(1) above is applicable) shall be deposited in the Primary Cash Collateral Account, (C) if, with respect to the Primary Liquidity Facility, neither subclause (A) nor subclause (B) of this clause "fourth" is applicable, to pay in full the outstanding amount of all Liquidity Obligations then due under the Primary Liquidity Facility shall be distributed to the Primary Liquidity Provider (other than amounts payable pursuant to clause "second" or "third" of this Section 3.03 and as determined 38 after giving effect to payments made by the Policy Provider to the Primary Liquidity Provider in respect of principal of drawings under the Primary Liquidity Facility), pro rata with any amount distributable pursuant to subclause (D) of this clause "fourth" on the basis of the amount of all such Liquidity Obligations and unreimbursed Policy Provider Obligations payable to the Policy Provider under subclause (D) of this clause "fourth" and (D) if the Policy Provider has elected to pay to the Primary Liquidity Provider all outstanding drawings and interest owing to the Primary Liquidity Provider under the Primary Liquidity Facility pursuant to Section 2.06(c) hereof, to reimburse the Policy Provider for the principal amount of such payment made to the Primary Liquidity Provider, shall be distributed to the Policy Provider, but only after giving effect to the application of amounts, if any, under subclause (A) or (B) of this clause "fourth", and if any amount shall be distributable under subclause (C) of this clause "fourth", pro rata with any amount distributable pursuant to such subclause (C) on the basis of the amounts of all such unreimbursed Liquidity Obligations and the amount of such unreimbursed Policy Provider Obligations payable to the Policy Provider under this clause "fourth"; (v) fifth, if, with respect to the Primary Liquidity Facility, any amounts are to be deposited pursuant to either subclause (A) or (B) of clause "fourth" above, then the Primary Liquidity Provider with respect to the Primary Liquidity Facility shall be paid the excess of (x) the aggregate outstanding amount of unreimbursed Advances (whether or not then due) under the Primary Liquidity Facility over (y) the Required Amount (less the amount of any repayments of Interest Drawings under the Primary Liquidity Facility while subclause (A)(1) or (B)(1), as the case may be, of clause "fourth" above is applicable); (vi) sixth, if the Above-Cap Reserve Account had been previously funded as provided in Section 3.06(f), unless (A) a Performing Note Deficiency exists and a Liquidity Event of Default shall have occurred and be continuing with respect to the Primary Liquidity Facility or (B) a Final Drawing shall have occurred with respect to the Primary Liquidity Facility, such amount as shall be required to fund the Above-Cap Reserve Account up to an amount equal to the Termination Amount (as recalculated on such Distribution Date) less any amount then on deposit in the Above-Cap Account shall be deposited in the Above-Cap Reserve Account; (vii) seventh, such amount as shall be required to reimburse or pay (A) the Subordination Agent for any Tax (other than Taxes imposed on compensation paid hereunder), expense, fee, charge or other loss incurred by, or any other amount payable to, the Subordination Agent in connection with the transactions contemplated hereby (to the extent not previously reimbursed), shall be applied by the Subordination Agent in reimbursement of such amount, (B) each Trustee for any Tax (other than Taxes imposed on compensation paid under the applicable Trust Agreement), expense, fee, charge or other loss incurred by, or any other amount payable to, such Trustee under the applicable Trust Agreements (to the extent not previously reimbursed), shall be distributed to such Trustee, and (C) each Certificateholder for payments, if any, made by it pursuant to Section 5.02 in respect of amounts described in clause (A) above (without duplication of any amounts distributed pursuant to subclause (D)of clause "first" of this Section 3.03), shall be distributed to the applicable Trustee for the account of such Certificateholder, in 39 each such case, pro rata on the basis of all amounts described in clauses (A), (B) and (C) above; (viii) eighth, if any Class G Certificates are Outstanding on such Distribution Date, such amount as shall be required to pay in full Adjusted Expected Distributions on the Class G Certificates shall be distributed to the Class G Trustee; (ix) ninth, such amount as shall be required to pay all Policy Provider Obligations then due to the Policy Provider (other than amounts payable pursuant to clauses "first" through "fourth" of this Section 3.03 and other than any Policy Provider Interest Amounts) and any amounts due under the Policy Fee Letter shall be distributed to the Policy Provider; (x) tenth, such amount as shall be required to pay any Excess Reimbursement Obligations and Policy Provider Interest Amounts shall be distributed to the Policy Provider; (xi) eleventh, if any Class C Certificates are Outstanding on such Distribution Date, such amount as shall be required to pay in full Adjusted Expected Distributions on the Class C Certificates shall be distributed to the Class C Trustee, provided that once all of the beneficial interest in the Initial Class C Holder has been transferred to an entity other than Delta or any of its Affiliates, the Adjusted Expected Distributions on the Class C Certificates shall be distributed prior to the payment of Excess Reimbursement Obligations and Policy Provider Interest Amounts to the Policy Provider as provided in the preceding clause "tenth"; (xii) twelfth, if any Class D Certificates are Outstanding on such Distribution Date, such amount as shall be required to pay in full Adjusted Expected Distributions on the Class D Certificates shall be distributed to the Class D Trustee; (xiii) thirteenth, if the Above-Cap Reserve Account had been previously funded as provided in Section 3.06(f), unless (A) a Performing Note Deficiency exists and a Liquidity Event of Default shall have occurred and be continuing with respect to the Primary Liquidity Facility or (B) a Final Drawing shall have occurred with respect to the Primary Liquidity Facility, to fund the Above-Cap Reserve Account up to an amount equal to the applicable Termination Amount (as recalculated on such Distribution Date) shall be deposited in the Above-Cap Reserve Account; (xiv) fourteenth, (A) if any Class G Certificates are Outstanding on such Distribution Date, such amount as shall be required to pay Final Distributions on the Class G Certificates shall be distributed to the Class G Trustee after giving effect to the distributions made on such Distribution Date (B) after giving effect to clause (A) if any Class C Certificates are Outstanding on such Distribution Date, such amount remaining as shall be required to pay Final Distributions on the Class C Certificates shall be distributed to the Class C Trustee and (C) after giving effect to clauses (A) and (B) if any Class D Certificates are Outstanding on such Distribution Date, such amount as shall be 40 required to pay Final Distributions on the Class D Certificates shall be distributed to the Class D Trustee; and (xv) fifteenth, the balance, if any, of any such amount remaining shall be held in the Collection Account for later distribution in accordance with Article III. Section 3.04. Other Payments. (a) Any payments received by the Subordination Agent for which no provision as to the application thereof is made in this Agreement shall be distributed by the Subordination Agent in the order of priority specified in Section 3.03; provided, however, that to the extent any such payments are received or realized at any time after the Final Distributions for all Classes of Certificates have been made, such payments shall be distributed in the following order of priority: first, in the manner provided in clause "first" of Section 3.03 and second, in the manner provided in clause "thirteen" of Section 3.02. (b) Except as otherwise provided in Section 3.03 or Sections 3.06(a) and 3.06(b), if the Subordination Agent receives any Scheduled Payment after the Scheduled Payment Date relating thereto, but prior to such payment becoming an Overdue Scheduled Payment, then the Subordination Agent shall deposit such Scheduled Payment in the Collection Account and promptly distribute such Scheduled Payment in accordance with the priority of distributions set forth in Section 3.02; provided that, for the purposes of this Section 3.04(b) only, each reference in clause "eleventh" of Section 3.02 to "Distribution Date" shall be deemed to mean the actual date of payment of such Scheduled Payment and each reference in clause "sixth", "ninth" or "tenth" of Section 3.02 to "Distribution Date" shall be deemed to refer to such Scheduled Payment Date. Section 3.05. Payments to the Trustees, the Primary Liquidity Provider and the Policy Provider. Any amounts distributed hereunder to the Primary Liquidity Provider or the Policy Provider shall be paid to the Primary Liquidity Provider or the Policy Provider, as the case may be, by wire transfer of funds to the address the Primary Liquidity Provider or the Policy Provider, as the case may be, shall provide to the Subordination Agent. The Subordination Agent shall provide a Written Notice of any such transfer to the Primary Liquidity Provider or the Policy Provider, as the case may be, at the time of such transfer. Any amounts distributed hereunder by the Subordination Agent to any Trustee that is not the same institution as the Subordination Agent shall be paid to such Trustee by wire transfer of funds at the address such Trustee shall provide to the Subordination Agent. Section 3.06. Liquidity Facilities. (a) Interest Drawings and Above-Cap Payments. If on any Distribution Date, after giving effect to the subordination provisions of this Agreement and any Election Interest Payment made by the Policy Provider pursuant to subclause (ii) of Section 3.07(c), the Subordination Agent shall not have sufficient funds for the payment of any amounts due and owing in respect of accrued interest on the Class G Certificates (at the Stated Interest Rate for the Class G Certificates for the applicable Interest Period), then, prior to 1:00 p.m. (New York City time) on such Distribution Date, (i) the Subordination Agent shall request a drawing (each such drawing, an "INTEREST DRAWING") under the Primary Liquidity Facility (and concurrently with the making of such request, the Subordination Agent shall give notice to the Policy Provider of such insufficiency of funds) in an amount equal to the lesser of (x) an amount sufficient to pay the amount of such accrued interest (at the Stated Interest Rate 41 for the Class G Certificates for the applicable Interest Period) and (y) the Maximum Available Commitment under the Primary Liquidity Facility, and shall upon receipt of such amount pay such amount to the Class G Trustee in payment of such accrued interest as provided in Section 3.06(b) and (ii) if LIBOR for the Interest Period ending on such Distribution Date (or, if such Distribution Date is not the last day of an Interest Period, LIBOR for the Interest Period including such Distribution Date) exceeds Capped LIBOR, the Subordination Agent shall (if it can make the certification described in the last sentence of this Section 3.06(a)) request an interest rate cap payment (each such payment, an "ABOVE-CAP PAYMENT") under the Above-Cap Liquidity Facility, for credit to the Above-Cap Account in an amount equal to the product of (x) the difference between LIBOR for the Interest Period ending on such Distribution Date (or, if such Distribution Date is not the last day of an Interest Period, LIBOR for the Interest Period including such Distribution Date) and Capped LIBOR, multiplied by (y) the Pool Balance of the Class G Certificates as of such Distribution Date (and before giving effect to any distribution on such date), multiplied by (z) the actual number of days elapsed in the Interest Period ending on such Distribution Date divided by 360, and upon the receipt thereof the Subordination Agent shall immediately deposit such Above-Cap Payment into the Above-Cap Account. If the Interest Drawing on such Distribution Date pursuant to clause (i) above, together with all other amounts available to the Subordination Agent on such Distribution Date (after giving effect to the subordination provisions of this Agreement and any withdrawals from the Primary Cash Collateral Account), is insufficient to pay accrued interest (at the Stated Interest Rate for the Class G Certificates for the applicable Interest Period) payable on the Class G Certificates on such Distribution Date (such deficiency, the "DEFICIENCY AMOUNT"), the Subordination Agent shall, prior to 4:00 p.m. (New York City time) on such Distribution Date, withdraw (each, an "ABOVE-CAP WITHDRAWAL") from the Above-Cap Account for the Class G Certificates an amount equal to the lesser of (x) such Deficiency Amount and (y) the amount on deposit in the Above-Cap Account (including any amounts deposited, or to be deposited, on such Distribution Date pursuant to clause (ii) above), and shall pay such amount to the Class G Trustee in payment of such accrued interest. In connection with a request for an Above-Cap Payment under the Above-Cap Liquidity Facility pursuant to clause (ii) above, the Subordination Agent shall certify to the Above-Cap Liquidity Provider that at least one of the following statements is true as of such Distribution Date prior to making such Above-Cap Withdrawal: (x) the Maximum Available Commitment under the Primary Liquidity Facility (prior to giving effect to any Interest Drawings to be made on such Distribution Date) is greater than zero; (y) the amount on deposit in the Primary Cash Collateral Account (prior to giving effect to any withdrawal to be made from such account on such Distribution Date) is greater than zero; or (z) the amount on deposit in the Above-Cap Account (prior to giving effect to any withdrawal to be made from such account on such Distribution Date) is greater than zero. (b) Application of Interest Drawings and Above-Cap Withdrawals. Notwithstanding anything to the contrary contained in this Agreement, (i) all payments received by the Subordination Agent in respect of an Interest Drawing under the Primary Liquidity Facility and all amounts withdrawn by the Subordination Agent from the Primary Cash Collateral Account, and payable in each case to the Class G Certificateholders, shall be promptly distributed to the Class G Trustee and applied to the payment of interest in respect of which it was drawn, except that if (x) the Subordination Agent shall receive any amount in respect of an Interest Drawing under the Primary Liquidity Facility or a withdrawal from the Primary Cash Collateral Account to pay Accrued Class G Interest after such Accrued Class G Interest has been 42 fully paid by a Policy Drawing under the applicable Policy pursuant to Section 3.07(a) hereof, or (y) the Subordination Agent shall receive any amount in respect of a Policy Drawing under the applicable Policy pursuant to Section 3.07(a) hereof to fully pay Accrued Class G Interest after such Accrued Class G Interest has been paid (in full or in part) to the Class G Trustee by an Interest Drawing under the Primary Liquidity Facility or a withdrawal from the Primary Cash Collateral Account, the Subordination Agent, in the case of either clause (x) or (y), shall pay an amount equal to the amount of such Interest Drawing or withdrawal directly to the Policy Provider as reimbursement of such Policy Drawing rather than to the Class G Certificateholders or Class G Trustee and (ii) all payments received by the Subordination Agent in respect of an Above-Cap Withdrawal from the Above-Cap Account, and payable to the Class G Certificateholders shall be promptly distributed to the Class G Trustee and applied to the payment of interest in respect of which it was drawn, except that if (x) the Subordination Agent shall receive any amount in respect of such Above-Cap Withdrawal to pay Accrued Class G Interest after such Accrued Class G Interest has been fully paid to the Class G Trustee by a Policy Drawing under the Policy pursuant to Section 3.07(a) hereof or (y) the Subordination Agent shall receive any amount in respect of a Policy Drawing under the Policy pursuant to Section 3.07(a) to fully pay Accrued Class G Interest after such Accrued Class G Interest has been paid (in full or in part) to the Class G Trustee by an Above-Cap Withdrawal, in the case of either clause (x) or (y), an amount equal to such amount received in respect of such Above-Cap Withdrawal shall be paid directly to the Policy Provider as reimbursement of such Policy Drawing rather than to the Class G Certificateholders or the Class G Trustee. (c) Downgrade Drawings. (i) The Primary Liquidity Provider will promptly, but in any event within ten days of its receipt of notice thereof, deliver notice of any downgrading of its debt ratings to the Subordination Agent, the Policy Provider, and Delta. If at any time the short-term unsecured debt rating of the Primary Liquidity Provider issued by Moody's or the short-term issuer credit rating of the Primary Liquidity Provider issued by S&P (or if the Primary Liquidity Provider does not have a short-term unsecured debt rating or short-term issuer credit rating, as applicable, issued by Moody's or S&P, the long-term unsecured debt rating or long-term issuer credit rating of the Primary Liquidity Provider issued by such Rating Agency) is lower than the applicable Threshold Rating, within 10 days after such downgrading (but not later than the expiration date of the Primary Liquidity Facility issued by such downgraded Primary Liquidity Provider (the "DOWNGRADED FACILITY")), the Primary Liquidity Provider or Delta may arrange for a Replacement Primary Liquidity Provider to issue and deliver a Replacement Primary Liquidity Facility to the Subordination Agent. If a Downgraded Facility has not been replaced in accordance with the terms of this paragraph, the Subordination Agent shall, on such 10th day (or if such 10th day is not a Business Day, on the next succeeding Business Day) (or, if earlier, on the expiration date of such Downgraded Facility), request a drawing in accordance with and to the extent permitted by such Downgraded Facility (such drawing, a "DOWNGRADE DRAWING") of all available and undrawn amounts thereunder. Amounts drawn pursuant to a Downgrade Drawing shall be maintained and invested as provided in Section 3.06(f). Subject to Section 3.06(e)(iii), the Primary Liquidity Provider may also arrange for a Replacement Primary Liquidity Provider to issue and deliver a Replacement Primary Liquidity Facility at any time after such Downgrade Drawing so long as such Downgrade Drawing has not been reimbursed in full to the Primary Liquidity Provider. 43 (ii) If a "Termination Event" or an "Additional Termination Event" (each as defined in the Above-Cap Liquidity Facility, each such event, a "MANDATORY TERMINATION EVENT") shall occur under the Above-Cap Liquidity Facility, the Above-Cap Liquidity Provider shall provide notice of such Mandatory Termination Event in writing to Delta, the Subordination Agent, the Policy Provider and the Class G Trustee, and within the time period specified in the Above-Cap Liquidity Facility (but in no event later than the expiration date of the Above-Cap Liquidity Facility) Delta or the Above-Cap Liquidity Provider may, in each case at its own expense, arrange for one or more Replacement Above-Cap Liquidity Providers to issue and deliver a Replacement Above-Cap Liquidity Facility for the Above-Cap Liquidity Facility to the Subordination Agent. In the event that the Above-Cap Liquidity Provider or Delta makes arrangements for a Replacement Above-Cap Liquidity Facility in accordance with the terms of the Above-Cap Liquidity Facility, (y) the Subordination Agent shall, if and to the extent so requested by the Above-Cap Liquidity Provider or Delta, execute and deliver any certificate or other instrument required to give effect to such replacement and (z) each of the parties hereto shall enter into any amendments to this Agreement necessary to give effect to such replacement. If the Above-Cap Liquidity Facility is subject to a Mandatory Termination Event and has not been replaced in accordance with its terms and the terms of this paragraph or if an Early Termination Date has been designated under the Above-Cap Liquidity Facility after the occurrence of an Event of Default (as defined in the Above-Cap Liquidity Facility), the Above-Cap Liquidity Facility shall be terminated and the Above-Cap Liquidity Provider shall, on such Early Termination Date, pay to the Subordination Agent, for the benefit of the Class G Trustee on behalf of the holders of the Class G Certificates, the Termination Amount for credit to the Above-Cap Reserve Account, to be applied as provided in Section 3.06(f) hereof plus the amount of all other unpaid sums due and payable by the Above-Cap Liquidity Provider thereunder on or prior to such date, and upon such payment, such Above-Cap Liquidity Facility shall be terminated. Nothing contained herein shall limit the rights of the Above-Cap Liquidity Provider to transfer its rights and obligations under the Above-Cap Liquidity Facility or otherwise arrange for a Replacement Above-Cap Liquidity Facility, subject to and in accordance with the provisions of the Above-Cap Liquidity Facility. (d) Non-Extension Drawings. If the Primary Liquidity Facility is scheduled to expire on a date (the "STATED EXPIRATION DATE") prior to the date that is 15 days after the Final Legal Distribution Date for the Class G Certificates, then no earlier than the 60th day and no later than the 40th day prior to the then applicable Stated Expiration Date, the Subordination Agent shall request in writing that the Primary Liquidity Provider extend the Stated Expiration Date to the earlier of (i) the date that is 15 days after the Final Legal Distribution Date for the Class G Certificates and (ii) the date that is the day immediately preceding the 364th day after the last day of the Consent Period (unless the obligations of the Primary Liquidity Provider thereunder are earlier terminated in accordance with the Primary Liquidity Facility). The Primary Liquidity Provider shall by notice (the "CONSENT NOTICE") to the Subordination Agent, during the period commencing on the date that is 60 days prior to the then effective Stated Expiration Date and ending on the date that is 25 days prior to such Stated Expiration Date (the "CONSENT PERIOD") advise the Subordination Agent whether, in its sole discretion, it agrees to so extend the Stated Expiration Date; provided, however, that such extension shall not be effective with respect to the Primary Liquidity Provider if, by notice (the "WITHDRAWAL NOTICE") to the Subordination Agent prior to the end of the Consent Period, the Primary Liquidity Provider revokes the Consent Notice. If the Primary Liquidity Provider advises the Subordination Agent 44 in the Consent Notice that such Stated Expiration Date shall not be so extended, gives a Withdrawal Notice to the Subordination Agent prior to the end of the Consent Period, or fails to irrevocably and unconditionally advise the Subordination Agent on or before the end of the Consent Period that such Stated Expiration Date shall be so extended (and, in each case, if the Primary Liquidity Provider shall not have been replaced in accordance with Section 3.06(e)), the Subordination Agent shall, on the date on which the Consent Period ends (or as soon as possible thereafter but prior to the Stated Expiration Date), in accordance with and to the extent permitted by the terms of the expiring Primary Liquidity Facility (a "NON-EXTENDED FACILITY"), request a drawing under the expiring Primary Liquidity Facility (such drawing, a "NON-EXTENSION DRAWING") of all available and undrawn amounts thereunder. Amounts drawn pursuant to a Non-Extension Drawing shall be maintained and invested in accordance with Section 3.06(f). If any amounts shall be drawn pursuant to a Non-Extension Drawing and, within 30 days thereafter, the Primary Liquidity Provider shall not have been replaced, then at any time following the 30th day after such Non-Extension Drawing, the Primary Liquidity Provider may, by written notice to the Subordination Agent, agree to reinstate the Primary Liquidity Facility on the terms of the existing Primary Liquidity Facility for a period ending on the 364th day after the end of the Consent Period; provided, however, that in such event the Primary Liquidity Provider shall reimburse the Subordination Agent for any costs actually incurred by or on behalf of the Subordination Agent in drawing pursuant to the Non-Extension Drawing and funding the Primary Cash Collateral Account or otherwise in connection with the Non-Extension Drawing. The Primary Liquidity Provider shall provide to the Policy Provider a copy of each notice delivered by it to the Subordination Agent under this Section 3.06(d). (e) Issuance of Replacement Primary Liquidity Facility. (i) Subject to Section 3.06(e)(iii) and the agreements, if any, in the Fee Letter, at any time, Delta may, at its option, with notice to the Policy Provider, with cause or without cause, arrange for a Replacement Primary Liquidity Facility to replace the Primary Liquidity Facility (including the Replacement Primary Liquidity Facility provided pursuant to Section 3.06(e)(ii)). If a Replacement Primary Liquidity Facility is provided at any time after a Downgrade Drawing or a Non-Extension Drawing has been made, all funds on deposit in the Primary Cash Collateral Account resulting from such Downgrade Drawing or Non-Extension Drawing will be returned to the Primary Liquidity Provider being replaced. (ii) If any Primary Liquidity Provider shall determine not to extend its Primary Liquidity Facility in accordance with Section 3.06(d), then such Primary Liquidity Provider may, at its option, arrange for a Replacement Primary Liquidity Facility to replace its Primary Liquidity Facility during the period no earlier than 40 days and no later than 25 days prior to the then effective Stated Expiration Date of such Primary Liquidity Facility. (iii) No Replacement Primary Liquidity Facility arranged by Delta or a Primary Liquidity Provider in accordance with Section 3.06(c) or clause (i) or (ii) of this Section 3.06(e) shall become effective and no such Replacement Primary Liquidity Facility shall be deemed a "Primary Liquidity Facility" under the Operative Agreements, unless and until (A) each of the conditions referred to in Section 3.06(e)(iv) below shall have been satisfied and (B) in the case of a Replacement Primary Liquidity Facility arranged by the Primary Liquidity Provider under Section 3.06(c) or Section 3.06(e)(ii), such Replacement Primary Liquidity Provider and such Replacement Primary Liquidity Facility (including the fees, compensation, 45 interest, increased costs or withholding payable thereunder to the Replacement Primary Liquidity Provider) are reasonably acceptable to Delta. (iv) In connection with the issuance of a Replacement Primary Liquidity Facility, the Subordination Agent shall (x) prior to the issuance of such Replacement Primary Liquidity Facility, obtain written confirmation from each Rating Agency that such Replacement Primary Liquidity Facility will not cause a reduction of any rating then in effect for the Class G Certificates by such Rating Agency (without regard to any downgrading of any rating of the Primary Liquidity Provider being replaced pursuant to Section 3.06(c) and without regard to the Policy), and the written consent of the Policy Provider (which consent shall not be unreasonably withheld or delayed), (y) pay all Liquidity Obligations then owing to the replaced Primary Liquidity Provider (which payment shall be made first from available funds in the applicable Primary Cash Collateral Account as described in Section 3.06(f)(iii), and thereafter from any other available source, including, without limitation, a drawing under the Replacement Primary Liquidity Facility) and (z) cause the issuer of the Replacement Primary Liquidity Facility to deliver the Replacement Primary Liquidity Facility to the Subordination Agent, together with a legal opinion addressed to the Subordination Agent, the Policy Provider, the Trustees and Delta opining that such Replacement Primary Liquidity Facility is an enforceable obligation of such Replacement Primary Liquidity Provider. (v) Upon satisfaction of the conditions set forth in Sections 3.06(e)(iii) and 3.06(e)(iv), (1) the replaced Primary Liquidity Facility shall terminate, (2) the Subordination Agent shall, if and to the extent so requested by Delta or the Primary Liquidity Provider being replaced, execute and deliver any certificate or other instrument required in order to terminate the replaced Primary Liquidity Facility, shall surrender the replaced Primary Liquidity Facility to the Primary Liquidity Provider being replaced and shall execute and deliver the Replacement Primary Liquidity Facility and any associated Fee Letter, (3) each of the parties hereto shall enter into any amendments to this Agreement necessary to give effect to the replacement of the Primary Liquidity Provider with the Replacement Primary Liquidity Provider and the replacement of the Primary Liquidity Facility with the Replacement Primary Liquidity Facility and (4) the Replacement Liquidity Provider shall be deemed to be the Primary Liquidity Provider with the rights and obligations of the Primary Liquidity Provider hereunder and under the other Operative Agreements and such Replacement Primary Liquidity Facility shall be deemed to be the Primary Liquidity Facility hereunder and under the other Operative Agreements. (f) Cash Collateral Accounts; Above-Cap Account Withdrawals; Withdrawals; Investments. If the Subordination Agent shall draw all available amounts under the Primary Liquidity Facility pursuant to Section 3.06(c), 3.06(d) or 3.06(i), or in the event amounts are to be deposited in the Primary Cash Collateral Account pursuant to subclause (A) or (B) of clause "third" of Section 2.04(b), subclause (A) or (B) of clause "third" of Section 3.02 or subclause (A) or (B) of clause "fourth" of Section 3.03, amounts so drawn or to be deposited, as the case may be, shall be deposited by the Subordination Agent in the Primary Cash Collateral Account. If the Above-Cap Liquidity Provider shall at any time make a Termination Amount payment under the Above-Cap Liquidity Facility, such Termination Amount payment shall be deposited by the Subordination Agent in the Above-Cap Reserve Account to be applied as specified below in this Section 3.06(f). All amounts on deposit in each Cash Collateral Account shall be invested and reinvested in Eligible Investments in accordance with Section 2.02(b). On each Interest 46 Payment Date (or, in the case of any Special Distribution Date occurring prior to the occurrence of a Triggering Event, on such Special Distribution Date), Investment Earnings on amounts on deposit in the Primary Cash Collateral Account (or in the case of any Special Distribution Date occurring prior to the occurrence of a Triggering Event, Investment Earnings equal to the product of such Investment Earnings multiplied by the Section 2.04(b) Fraction) shall be deposited in the Collection Account (or, in the case of any Special Distribution Date occurring prior to the occurrence of a Triggering Event, the Special Payments Account) and applied on such Interest Payment Date (or Special Distribution Date, as the case may be) in accordance with Section 2.04(b), 3.02 or 3.03 (as applicable). Investment Earnings on amounts on deposit in the Above-Cap Reserve Account shall be credited to such account and applied in the same manner as the Termination Amount payment credited thereto. Investment Earnings on amounts on deposit in the Above-Cap Account shall be credited to such account and applied in the same manner as Above-Cap Payments credited thereto. The Subordination Agent shall deliver a written statement to Delta, the Policy Provider and the Liquidity Providers, one day prior to each Interest Payment Date and Special Distribution Date setting forth the aggregate amount of Investment Earnings held in each of the Cash Collateral Accounts as of such date. The Subordination Agent shall also deliver a written statement to Delta, the Policy Provider and the Above-Cap Liquidity Provider one day after each Distribution Date on which amounts have been deposited in the Above-Cap Account and/or withdrawn from the Above-Cap Reserve Account setting forth the amount of such deposit and/or withdrawal. In addition, from and after the date funds are so deposited, the Subordination Agent shall make withdrawals from such account as follows: (i) on each Distribution Date, the Subordination Agent shall, to the extent it shall not have received funds to pay accrued and unpaid interest due and owing on the Class G Certificates (at the Stated Interest Rate for the Class G Certificates for the applicable Interest Period) after giving effect to the subordination provisions of this Agreement and any Election Interest Payment made by the Policy Provider, (A) withdraw from the Primary Cash Collateral Account, and pay to the Class G Trustee an amount equal to the lesser of (x) an amount necessary to pay accrued and unpaid interest (at the Stated Interest Rate for the Class G Certificates for the applicable Interest Period) on such Class G Certificates and (y) the amount on deposit in the Primary Cash Collateral Account (so long as the aggregate amount of unreplenished withdrawals, including such withdrawal, does not exceed the Required Amount for such Distribution Date); and (B) if an "Above-Cap Payment" would have been required to be made on such Distribution Date pursuant to the terms of the Above-Cap Liquidity Facility were such Liquidity Facility still in effect, withdraw from the Above-Cap Reserve Account, and deposit into the Above-Cap Account, an amount (if any) equal to the lesser of (x) an amount equal to such Above-Cap Payment and (y) the amount on deposit in the Above-Cap Reserve Account; (ii) on each date on which the Pool Balance of the Class G Trust shall have been reduced by payments made to the Class G Certificateholders pursuant to Section 2.04(b), 3.02 or 3.03, the Subordination Agent shall withdraw from the Primary Cash Collateral Account such amount as is necessary so that, after giving effect to the reduction of such Pool Balance on such date (including any such reduction resulting from a prior withdrawal of amounts on deposit in the Primary Cash Collateral Account on such 47 date) and any transfer of Investment Earnings from the Primary Cash Collateral Account to the Collection Account or the Special Payments Account on such date, an amount equal to the sum of the Required Amount (with respect to the Primary Liquidity Facility) plus the remaining Investment Earnings on deposit in the Primary Cash Collateral Account (if any) will be on deposit in the Primary Cash Collateral Account and shall, first, pay such withdrawn amount to the Primary Liquidity Provider until the Liquidity Obligations owing to the Primary Liquidity Provider shall have been paid in full and, second, deposit any remaining amount in the Collection Account; (iii) if a Replacement Primary Liquidity Facility shall be delivered to the Subordination Agent following the date on which funds have been deposited into the Primary Cash Collateral Account, the Subordination Agent shall withdraw all amounts remaining on deposit in the Primary Cash Collateral Account and shall pay such amounts to the replaced Primary Liquidity Provider until all Liquidity Obligations owed to such Person shall have been paid in full, and deposit any remaining amount in the Collection Account; and (iv) (A) following the payment of Final Distributions with respect to the Class G Certificates, on the date on which the Subordination Agent shall have been notified by the Primary Liquidity Provider that the Liquidity Obligations owed to the Primary Liquidity Provider have been paid in full, the Subordination Agent shall withdraw all amounts on deposit in the Primary Cash Collateral Account and deposit such amount in the Collection Account and, (B) on the first Business Day occurring immediately after the earlier of (1) the date of the payment of Final Distributions with respect to the Class G Certificates and (2) the Final Legal Distribution Date for the Class G Certificates (after giving effect to all distributions to be made on such date), the Subordination Agent shall pay to the Above-Cap Liquidity Provider an amount equal to the sum of the amounts (if any) on deposit in the Above-Cap Account and the Above-Cap Reserve Account. (g) Reinstatement. With respect to any Interest Drawing under the Primary Liquidity Facility, upon the reimbursement of the Primary Liquidity Provider for all or any part of the amount of such Interest Drawing, together with any accrued interest thereon, the Maximum Available Commitment shall be reinstated by an amount equal to the amount of such Interest Drawing so reimbursed to the Primary Liquidity Provider but not to exceed the Stated Amount for the Primary Liquidity Facility; provided, however, that the Primary Liquidity Facility shall not be so reinstated in part or in full at any time if (x) both a Performing Note Deficiency exists and a Liquidity Event of Default shall have occurred and be continuing or (y) a Final Drawing shall have occurred; provided, further, that any payment by the Policy Provider to the Primary Liquidity Provider of any amounts pursuant to the second proviso to Section 2.06(c) shall not reinstate the Primary Liquidity Facility, but the Primary Liquidity Facility (so long as it is in effect) shall be reinstated, pro tanto, to the extent the Policy Provider receives any reimbursement in respect of such payment under clause "third" of Section 2.04(b), clause "third" of Section 3.02 or clause "fourth" of Section 3.03., unless (x) both a Performing Note Deficiency exists and a Liquidity Event of Default shall have occurred with respect to the Primary Liquidity Facility or (y) a Final Drawing shall have occurred with respect to the Primary Liquidity Facility. In the event that (i) funds are withdrawn from the Primary Cash Collateral Account pursuant to clause (i), (ii), (iii) or (iv) of Section 3.06(f) or (ii) such Primary Liquidity Facility shall become 48 a Downgraded Facility or a Non-Extended Facility at a time when unreimbursed Interest Drawings under the Primary Liquidity Facility have reduced the Maximum Available Commitment thereunder to zero, then funds received by the Subordination Agent at any time, other than (x) any time when both a Performing Note Deficiency exists and a Liquidity Event of Default shall have occurred and be continuing or (y) any time after a Final Drawing shall have occurred, shall be deposited in the Primary Cash Collateral Account as and to the extent provided in clause "third" of Section 2.04(b), clause "third" of Section 3.02 or clause "fourth" of Section 3.03, as applicable, and applied in accordance with Section 3.06(f). (h) Reimbursement. The amount of each drawing under the Primary Liquidity Facility shall be due and payable, together with interest thereon, on the dates and at the rates, respectively, provided in the Primary Liquidity Facility. The Subordination Agent shall have no obligation to reimburse the Above-Cap Liquidity Provider for any Above-Cap Payments and the Above-Cap Liquidity Provider shall have no interest in any monies credited to any Trust Account except as provided in Section 3.06(f)(iv) hereof. (i) Final Drawing. Upon receipt from the Primary Liquidity Provider of a Termination Notice with respect to the Primary Liquidity Facility, the Subordination Agent shall, not later than the date specified in such Termination Notice, in accordance with and to the extent permitted by the terms of the Primary Liquidity Facility, request a drawing under the Primary Liquidity Facility of all available and undrawn amounts thereunder (a "FINAL DRAWING"). Amounts drawn pursuant to a Final Drawing shall be maintained and invested in accordance with Section 3.06(f). (j) Reduction of Stated Amount. Promptly following each date on which the Required Amount of the Primary Liquidity Facility is reduced as a result of a reduction (i) in the Capped Interest Rate or (ii) in the Pool Balance with respect to the Class G Certificates (including by reason of a Policy Provider Election with respect to any Series G Equipment Note), the Subordination Agent shall, if the Primary Liquidity Facility provides for reductions of the Stated Amount of the Primary Liquidity Facility and if such reductions are not automatic, request the Primary Liquidity Provider to reduce such Stated Amount to an amount equal to the Required Amount with respect to the Primary Liquidity Facility (as calculated by the Subordination Agent after giving effect to such payment). Each such request shall be made in accordance with the provisions of the Primary Liquidity Facility. (k) Relation to Subordination Provisions. Interest Drawings under the Primary Liquidity Facility and withdrawals from the Primary Cash Collateral Account and the Above-Cap Account, in each case, in respect of interest on the Class G Certificates, will be distributed to the Class G Trustee, notwithstanding Sections 2.04(b), 3.02, 3.03 and 3.06. (l) Assignment of the Primary Liquidity Facility. The Subordination Agent agrees not to consent to the assignment by the Primary Liquidity Provider of any of its rights or obligations under the Primary Liquidity Facility or any interest therein unless (i) Delta shall have consented to such assignment, (ii) each Rating Agency shall have provided a Ratings Confirmation in respect of such assignment and (iii) the Policy Provider shall have consented to such assignment (which consent shall not be unreasonably withheld or delayed); provided that 49 the Subordination Agent shall consent to such assignment if the conditions in the foregoing clauses (i), (ii) and (iii) are satisfied. Section 3.07. The Policy. (a) Interest Drawings. If on any Regular Distribution Date (other than the Final Legal Distribution Date) after giving effect to the subordination provisions of this Agreement and to the application of available funds in accordance with the priorities specified in Section 2.04 and Article III, and taking into account the application of any Drawing paid under the Primary Liquidity Facility in respect of Accrued Class G Interest due on such Distribution Date and any withdrawal of funds from the Primary Cash Collateral Account and the Above-Cap Account in respect of such Accrued Class G Interest on such Distribution Date, the Subordination Agent does not then have sufficient funds available for the payment of Accrued Class G Interest, then, prior to 1:00 p.m. (New York City time) on such Distribution Date, the Subordination Agent (i) shall deliver a Notice of Nonpayment, as provided in the Policy to the Policy Provider or its fiscal agent, requesting a Policy Drawing under the Policy (for payment into the Policy Account) in an amount sufficient to enable the Subordination Agent to pay such Accrued Class G Interest and (ii) upon receipt shall pay such amount from the Policy Account to the Class G Trustee in payment of such Accrued Class G Interest on such Distribution Date. (b) Proceeds Deficiency Drawing. If on any Special Distribution Date (other than a Special Distribution Date established pursuant to the second paragraph of Section 3.07(c)) established by the Subordination Agent by reason of its receipt of a Special Payment (a "DISPOSITION PAYMENT") constituting the proceeds of any Series G Equipment Note or related Collateral, as the case may be, there exists a shortfall in the amounts available to the Subordination Agent (after giving effect to the subordination provisions of this Agreement and to the application of available funds (including, without limitation, the amount of such Disposition Payment) in accordance with the priorities specified in Section 2.04 and Article III, and (if the disposition of such Series G Equipment Note or related Collateral occurs prior to a Policy Provider Election with respect to such Series G Equipment Note) taking into account the application of any Drawing paid under the Primary Liquidity Facility in respect of Accrued Class G Interest and any withdrawal of funds in the Primary Cash Collateral Account and the Above-Cap Account in respect of such interest) required to reduce the outstanding Pool Balance of the Class G Certificates by an amount equal to the outstanding principal amount of the applicable Series G Equipment Note (determined immediately prior to the receipt of such Disposition Payment and less the amount of any Policy Drawing previously paid by the Policy Provider in respect of principal of such Series G Equipment Note) plus accrued and unpaid interest on the amount of such reduction accrued at the Stated Interest Rate for the Class G Certificates for the period from the immediately preceding Regular Distribution Date to such Special Distribution Date, then, prior to 1:00 p.m. (New York City time) on such Special Distribution Date, the Subordination Agent (x) shall deliver a Notice of Nonpayment, as provided in the Policy to the Policy Provider or its fiscal agent requesting a Policy Drawing under the Policy (for payment into the Policy Account) in an amount equal to the amount of such shortfall and (y) shall pay the amount specified in clause (x) from the Policy Account to the Class G Trustee in payment of such reduction in the outstanding Pool Balance of the Class G Certificates plus such accrued and unpaid interest on such Special Distribution Date. The Subordination Agent shall promptly, but not less than 20 days prior to the Special Distribution Date established pursuant to this Section 50 3.07(b), send to Delta, the Trustees, the Primary Liquidity Provider and the Policy Provider, a Written Notice of such Special Distribution Date. (c) No Proceeds Drawing. On the first Business Day (which shall be a Special Distribution Date) that is 21 months after the last date on which full payment was made on any Series G Equipment Note (a "DEFAULTED SERIES G EQUIPMENT NOTE") as to which there has subsequently been a failure to pay principal or that has subsequently been Accelerated, if on or prior to such Business Day the Subordination Agent has not theretofore made a drawing under the Policy pursuant to Section 3.07(b), the Subordination Agent shall deliver a Notice of Nonpayment, as provided in the Policy, to the Policy Provider or its fiscal agent, requesting a Policy Drawing under the Policy (for payment into the Policy Account) in an amount equal to the then outstanding principal amount of such Defaulted Series G Equipment Note plus accrued and unpaid interest thereon at the Stated Interest Rate from the immediately preceding Regular Distribution Date. The Subordination Agent shall promptly, but not less than 25 days prior to such Business Day, send to Delta, the Trustees, the Primary Liquidity Provider and the Policy Provider a Written Notice establishing such Business Day as the date for the distribution of the proceeds of such Policy Drawing, which date shall constitute a Special Distribution Date. No later than 1:00 p.m. (New York City time) on the specified Special Distribution Date the Subordination Agent shall make the specified Policy Drawing and upon its receipt of the proceeds thereof pay the amount thereof from the Policy Account to the Class G Trustee in reduction of the outstanding Pool Balance of the Class G Certificates together with such accrued and unpaid interest on the amount of such reduction. For the avoidance of doubt, after the payment by the Policy Provider in full of such amount under this Section 3.07(c), the Subordination Agent shall have no right to make any further Policy Drawings under Section 3.07(c) in respect of such Defaulted Series G Equipment Note except for a drawing in respect of Preference Amounts as provided in Section 3.07(e). Notwithstanding the foregoing, the Policy Provider has the right, so long as no Policy Provider Default shall have occurred and be continuing, upon notice to the Subordination Agent given at least five days prior to the Special Distribution Date established by the Subordination Agent pursuant to the first paragraph of this Section 3.07(c), to elect instead (the "POLICY PROVIDER ELECTION") to pay (i) on such Special Distribution Date an amount equal to the scheduled principal and interest that came due on such Defaulted Series G Equipment Note (without regard to the Acceleration thereof) but was not paid during such 21-month period (after giving effect to the application of funds received from the Primary Liquidity Facility, the Primary Cash Collateral Account and the Above-Cap Account, in each case attributable to such interest) and (ii) thereafter, on each Regular Distribution Date, an amount equal to the scheduled principal and interest that were to become due on such Defaulted Series G Equipment Note on the related payment date (without regard to any Acceleration thereof or to any funds available under the Primary Liquidity Facility, any Cash Collateral Account or the Above-Cap Account) until the establishment of an Election Distribution Date or a Special Distribution Date established as provided in the immediately following sentence (the interest portion of each such payment, an "ELECTION INTEREST PAYMENT"). Following a Policy Provider Election with respect to a Defaulted Series G Equipment Note, on any Business Day (which shall be a Special Distribution Date) elected by the Policy Provider upon 20 days' Written Notice to the Subordination Agent and the Class G Trustee, the Policy Provider may, notwithstanding the Policy Provider Election, request the Subordination Agent to, and the Subordination Agent shall, 51 make a Policy Drawing for an amount equal to the then outstanding principal balance of such Defaulted Series G Equipment Note (less any Policy Drawings previously paid by the Policy Provider in respect of principal of such Defaulted Series G Equipment Note) and accrued and unpaid interest on such amounts at the Stated Interest Rate for the Class G Certificates from the immediately preceding Regular Distribution Date to such Special Distribution Date. Further, following a Policy Provider Election with respect to a Defaulted Series G Equipment Note, upon the occurrence and continuance of a Policy Provider Default, the Subordination Agent shall on any Business Day (an "ELECTION DISTRIBUTION DATE", which shall be a Special Distribution Date) elected by the Subordination Agent upon 20 days' Written Notice to the Class G Trustee and the Policy Provider, make a Policy Drawing for an amount equal to the then outstanding principal balance of such Defaulted Series G Equipment Note (less any Policy Drawings previously paid by the Policy Provider in respect of principal of such Defaulted Series G Equipment Note) and accrued and unpaid interest on such amounts at the Stated Interest Rate for the Class G Certificates from the immediately preceding Regular Distribution Date to such Election Distribution Date. The Subordination Agent shall make each such Policy Drawing referred to in this subparagraph (c) under the Policy (for payment into the Policy Account) no later than 1:00 p.m. (New York City time) on the relevant Special Distribution Date and upon its receipt of the proceeds thereof pay the amount thereof from the Policy Account to the Class G Trustee in reduction of the outstanding Pool Balance of the Class G Certificates together with such accrued and unpaid interest thereon. In addition, regardless of whether or not the Policy Provider makes a Policy Provider Election, the Policy Provider shall, from and after the end of such 21-month period, honor drawings by the Primary Liquidity Provider in respect of amounts referred to in clause (g) of the definition of "Deficiency Amount" contained in the Policy (each, an "EXCESS INTEREST POLICY DRAWING"). The Primary Liquidity Provider agrees to make such Excess Interest Policy Drawings and that the proceeds thereof shall reduce pro tanto the Liquidity Obligations owing to it. Upon the issuance of any Replacement Primary Liquidity Facility pursuant to Section 3.06(e), the Policy Provider agrees to promptly deliver to the Replacement Primary Liquidity Provider providing such Replacement Primary Liquidity Facility a certified copy of the Policy, provided that the Primary Liquidity Provider being replaced returns its certified copy of the Policy to the Policy Provider. (d) Final Policy Drawing. If on the Final Legal Distribution Date of the Class G Certificates after giving effect to the subordination provisions of this Agreement and the application of available funds in accordance with the priorities specified in Section 2.04 and Article III, and taking into account the application of any Drawing paid under the Primary Liquidity Facility in respect of interest included in the Final Distribution and any withdrawal of funds in the Primary Cash Collateral Account and Above-Cap Account in respect of interest included in the Final Distribution, the Subordination Agent does not then have sufficient funds available on such date for the payment in full of the Final Distribution (calculated as at such date but excluding any accrued and unpaid Additional Payment) on the Class G Certificates then, prior to 1:00 p.m. (New York City time) on such date, the Subordination Agent shall: (i) deliver a Notice of Nonpayment, as provided in the Policy, to the Policy Provider or its fiscal agent, requesting a Policy Drawing under the Policy (for payment into the Policy Account) in an amount equal to the minimum amount sufficient to enable the Subordination Agent to pay the 52 Final Distribution (calculated as at such date but excluding any accrued and unpaid Additional Payment) on the Class G Certificates, and (ii) upon receipt shall pay such amount from the Policy Account to the Class G Trustee in payment of such amount on such date. (e) Avoidance Drawings. If at any time the Subordination Agent shall have actual knowledge of the issuance of an Order, the Subordination Agent shall promptly give notice thereof to Delta, each Trustee, the Primary Liquidity Provider and the Policy Provider. The Subordination Agent shall thereupon calculate the relevant Preference Amounts resulting therefrom and shall promptly: (a) send to the Class G Trustee a Written Notice of such amount and (b) prior to the expiration of the Policy deliver to the Policy Provider, or its fiscal agent, a Notice of Avoided Payment, together with a copy of the documentation required by the Policy with respect thereto, requesting a Policy Drawing thereunder (for payment to the receiver, conservator, debtor-in-possession or trustee in bankruptcy and/or the Subordination Agent for deposit into the Policy Account) in an amount equal to the amount of relevant Preference Amount. To the extent that any portion of such Preference Amount is to be paid by the Subordination Agent, such Written Notice shall also set the date for the distribution of such portion of the proceeds of such Policy Drawing, which date shall constitute a Special Distribution Date and shall be the earlier of the third Business Day that immediately precedes the expiration of the Policy and the Business Day that immediately follows the 25th day after the date of such Written Notice. No later than 1:00 p.m. (New York City time) on the specified Special Distribution Date, the Subordination Agent shall make the specified Policy Drawing and, upon its receipt of the proceeds thereof, pay the amount thereof from the Policy Account to the Class G Trustee. (f) Application of Policy Drawings. Notwithstanding anything to the contrary contained in this Agreement (including, without limitation, Sections 2.04, 3.02 and 3.03 hereof), except as provided in Section 3.06(b)(i)(x) and (y) and Section 3.06(b)(ii)(x) and (y) hereof, all payments received by the Subordination Agent in respect of a Policy Drawing (including, without limitation, that portion, if any, of the proceeds of a Policy Drawing for any Preference Amount that is to be paid to the Subordination Agent and not to any receiver, conservator, debtor-in-possession or trustee-in-bankruptcy as provided in the Policy) shall be promptly paid from the Policy Account to the Class G Trustee for distribution to the Class G Certificateholders. (g) Reduction of Outstanding Pool Balance. Promptly following each date on which the Pool Balance of the Class G Certificates is reduced as a result of a payment under this Agreement, the Subordination Agent shall inform the Policy Provider of such reduction. Anything contained herein to the contrary notwithstanding, (i) no Policy Drawing for payment in respect of the Class G Certificates under clause (a) of this Section 3.07 shall be in excess of Accrued Class G Interest and (ii) no Policy Drawing under clauses (b) to (d) of this Section 3.07 shall be for an amount in excess of the then outstanding Pool Balance of the Class G Certificates plus Accrued Class G Interest. Nothing contained in this Intercreditor Agreement shall be deemed to alter or amend the liabilities, obligations, requirements or procedures of the Policy Provider under the Policy and the Policy Provider shall not be obligated to make payment except at the times and in the amounts and under the circumstances expressly set forth in the Policy. (h) Resubmission of Notice of Payment. If the Policy Provider at any time informs the Subordination Agent in accordance with the Policy that a Notice of Nonpayment or 53 Notice of Avoided Payment submitted by the Subordination Agent does not satisfy the requirements of the Policy, the Subordination Agent shall, as promptly as possible after being so informed, submit to the Policy Provider an amended and revised Notice of Nonpayment or Notice of Avoided Payment, as the case may be, and shall pay to the Class G Trustee out of the Policy Account the amount received pursuant to such amended or revised Notice of Nonpayment or Notice of Avoided Payment, as the case may be, when received. (i) Subrogation. The Policy Provider will be subrogated to all of the rights of the holders of the Class G Certificates to payment on the Class G Certificates to the extent of the payments made under the Policy as set forth herein, the exercise of such subrogation right to be subject to the other provisions of this Agreement. ARTICLE IV EXERCISE OF REMEDIES Section 4.01. Directions from the Controlling Party. (a) (i) The Controlling Party shall direct the Subordination Agent, which in turn shall direct the Loan Trustee under each Indenture, in the exercise of remedies available to the holders of the Equipment Notes issued pursuant to such Indenture, including, without limitation, the ability to vote all such Equipment Notes in favor of Accelerating such Equipment Notes in accordance with the provisions of such Indenture. If the Equipment Notes issued pursuant to any Indenture have been Accelerated following an Indenture Event of Default with respect thereto, the Controlling Party may direct the Subordination Agent to sell, assign, contract to sell or otherwise dispose of and deliver all (but not less than all) of such Equipment Notes to any Person at public or private sale, at any location at the option of the Controlling Party, all upon such terms and conditions as it may reasonably deem advisable and in accordance with applicable law. (ii) Notwithstanding the foregoing, so long as any Certificates remain Outstanding, during the period ending on the date which is nine months after the earlier of (x) the Acceleration of the Equipment Notes issued pursuant to any Indenture or (y) the occurrence of a Delta Bankruptcy Event, without the consent of each Trustee (other than the Trustee of any Trust all of the Certificates of which are held or beneficially owned by Delta and/or its Affiliates), no Aircraft subject to the Lien of such Indenture or such Equipment Notes may be sold if the net proceeds from such sale would be less than the Minimum Sale Price for such Aircraft or such Equipment Notes. (iii) At the request of the Controlling Party, the Subordination Agent may from time to time during the continuance of an Indenture Event of Default (and before the occurrence of a Triggering Event) commission an LTV Appraisal with respect to the Aircraft subject to such Indenture. (iv) After a Triggering Event occurs and any Equipment Note becomes a Non-Performing Equipment Note, the Subordination Agent shall obtain Appraisals with respect to all of the Aircraft (the "LTV APPRAISALS") as soon as practicable and additional LTV Appraisals on or prior to each anniversary of the date of such initial LTV Appraisals; provided that, if the Controlling Party reasonably objects to the appraised value of the Aircraft shown in such LTV Appraisals, 54 the Controlling Party shall have the right to obtain or cause to be obtained substitute LTV Appraisals (including any LTV Appraisals based upon physical inspection of the Aircraft). (b) To the extent permitted by applicable law, the Subordination Agent, at the direction of the Controlling Party, shall take such actions as it may reasonably deem most effectual to complete the sale or other disposition of such Aircraft or Equipment Notes. In addition, in lieu of any sale, assignment, contract to sell or other disposition, if the Subordination Agent is so directed by the Controlling Party, the Subordination Agent may maintain possession of such Equipment Notes and continue to apply monies received in respect of such Equipment Notes in accordance with Section 2.04(b) and Article III. In addition, in lieu of such sale, assignment, contract to sell or other disposition, or in lieu of such maintenance of possession, the Controlling Party may direct the Subordination Agent to, subject to the terms and conditions of the related Indenture, instruct the Loan Trustee under such Indenture to foreclose on the Lien on the related Aircraft or take any other remedial action permitted by such Indenture or applicable law. Section 4.02. Remedies Cumulative. Each and every right, power and remedy given to the Trustees, the Liquidity Providers, the Policy Provider, the Controlling Party or the Subordination Agent specifically or otherwise in this Agreement shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may, subject always to the terms and conditions hereof, be exercised from time to time and as often and in such order as may be deemed expedient by any Trustee, any Liquidity Provider, the Policy Provider, the Controlling Party or the Subordination Agent, as appropriate, and the exercise or the beginning of the exercise of any right, 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 any Trustee, any Liquidity Provider, the Policy Provider, the Controlling Party or the Subordination Agent in the exercise of any right, remedy or power or in the pursuit of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default or to be an acquiescence therein. Section 4.03. Discontinuance of Proceedings. In case any party to this Agreement (including the Controlling Party in such capacity) shall have instituted any Proceeding to enforce any right, power or remedy under this Agreement by foreclosure, entry or otherwise, and such Proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Person instituting such Proceeding, then and in every such case each such party shall, subject to any determination in such Proceeding, be restored to its former position and rights hereunder, and all rights, remedies and powers of such party shall continue as if no such Proceeding had been instituted. Section 4.04. Right of Certificateholders, the Primary Liquidity Provider and the Policy Provider to Receive Payments Not to Be Impaired. Subject to the provisions of this Agreement and each Trust Agreement, the right of any Certificateholder or the Primary Liquidity Provider or the Policy Provider, respectively, to receive payments hereunder (including, without limitation, pursuant to Section 2.04, 3.02 or 3.03) when due, or to institute suit for the enforcement of any such payment on or after the applicable Distribution Date, shall not be 55 impaired or affected without the consent of such Certificateholder, the Primary Liquidity Provider or the Policy Provider, respectively. ARTICLE V DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEES, ETC. Section 5.01. Notice of Indenture Event of Default or Triggering Event. (a) If the Subordination Agent shall have knowledge of an Indenture Event of Default or a Triggering Event, as promptly as possible and in any event within ten days after obtaining actual knowledge thereof, the Subordination Agent shall give notice thereof to the Rating Agencies, Delta, the Liquidity Providers, the Policy Provider and the Trustees by facsimile or telephone (to be promptly confirmed in writing), unless such Indenture Event of Default or Triggering Event shall have been cured or waived. For all purposes of this Agreement, in the absence of actual knowledge, the Subordination Agent shall not be deemed to have knowledge of any Indenture Event of Default or Triggering Event unless notified in writing by Delta, one or more Trustees, one or more Liquidity Providers, the Policy Provider or one or more Certificateholders; and "actual knowledge" (as used in the foregoing clause) of the Subordination Agent shall mean actual knowledge of an officer in the Corporate Trust Office of the Subordination Agent or any other Responsible Officer thereof. (b) The Subordination Agent will furnish to each Liquidity Provider, the Policy Provider and each Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Subordination Agent as registered holder of the Equipment Notes or otherwise in its capacity as Subordination Agent to the extent the same shall not have been otherwise directly distributed to such Liquidity Provider, the Policy Provider or each Trustee, as applicable, pursuant to any other Operative Agreement. Section 5.02. Indemnification. The Subordination Agent shall not be required to take any action or refrain from taking any action under Article IV unless the Subordination Agent shall have received indemnification against any risks incurred in connection therewith in form and substance reasonably satisfactory to it, including, without limitation, adequate advances against costs that may be incurred by it in connection therewith. The Subordination Agent shall not be required to take any action under Article IV, nor shall any other provision of this Agreement or any other Operative Agreement be deemed to impose a duty on the Subordination Agent to take any action, if the Subordination Agent shall have been advised by outside counsel that such action is contrary to the terms hereof or is otherwise contrary to law. Section 5.03. No Duties Except as Specified in Intercreditor Agreement. The Subordination Agent shall not have any duty or obligation to take or refrain from taking any action under, or in connection with, this Agreement, except as expressly provided by the terms of this Agreement; and no implied duties or obligations shall be read into this Agreement against the Subordination Agent. The Subordination Agent agrees that it will, in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense) promptly take such action as may be necessary duly to discharge all Liens on any of the 56 Trust Accounts or any monies deposited therein that are attributable to the Subordination Agent in its individual capacity and that are unrelated to the transaction contemplated hereby and by the other Operative Agreements. Section 5.04. Notice from the Liquidity Providers and Trustees. If any Liquidity Provider, the Policy Provider or any Trustee has notice of an Indenture Event of Default or a Triggering Event, such Person shall promptly give notice thereof to all other Liquidity Providers, the Policy Provider and all other Trustees and to the Subordination Agent; provided, however, that no such Person shall have any liability hereunder as a result of its failure to deliver any such notice. Section 5.05. Agreements Relating to the Above-Cap Liquidity Facility. Each of the Subordination Agent and the Class G Trustee agrees at the request of the Above-Cap Liquidity Provider to use reasonable efforts (consistent with applicable legal and regulatory restrictions) to take any action that would avoid the need for, or reduce the amount of, any payment under Section 2(d) of the ISDA Master Agreement forming part of the Above-Cap Liquidity Facility; provided that any such action would not, in the reasonable judgment of such Person, be materially disadvantageous to it. Notwithstanding anything to the contrary contained herein, but without limiting, and subject to, the rights of the Subordination Agent hereunder, the obligation of the Above-Cap Liquidity Provider to make any Above-Cap Payment or pay any Termination Amount shall be governed exclusively by the applicable Above-Cap Liquidity Facility. ARTICLE VI THE SUBORDINATION AGENT Section 6.01. Authorization; Acceptance of Trusts and Duties. The Class G Trustee hereby designates and appoints the Subordination Agent as its agent and trustee under the applicable Liquidity Facility and authorizes the Subordination Agent to enter into the applicable Liquidity Facility as its agent and trustee. Each of the Liquidity Providers, the Policy Provider and the Trustees hereby designates and appoints the Subordination Agent as the Subordination Agent under this Agreement. 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 Agreement and agrees to receive, handle and disburse all monies received by it in accordance with the terms hereof. The Subordination Agent shall have no liability hereunder except (a) for its own willful misconduct or negligence, (b) as provided in Section 2.02 and the last sentence of Section 5.03, (c) for liabilities that may result from the inaccuracy of any representation or warranty of the Subordination Agent made in its individual capacity in any Operative Agreement and (d) as otherwise expressly provided herein or in the other Operative Agreements. Section 6.02. Absence of Duties. The Subordination Agent shall have no duty to see to any recording or filing of this Agreement or any other document, or to see to the maintenance of any such recording or filing. Section 6.03. No Representations or Warranties as to Documents. The Subordination Agent shall not be deemed to have made any representation or warranty as to the 57 validity, legality or enforceability of this Agreement or any other Operative Agreement or as to the correctness of any statement contained herein or therein (other than the representations and warranties of the Subordination Agent made in its individual capacity under any Operative Agreement), except that the Subordination Agent 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. The Certificateholders, the Trustees, the Policy Provider and the Liquidity Providers make no representation or warranty hereunder whatsoever. Section 6.04. No Segregation of Monies; No Interest. Any monies paid to or retained by the Subordination Agent pursuant to any provision hereof and not then required to be distributed to any Trustee, the Policy Provider or any Liquidity Provider as provided in Articles II and III or deposited into one or more Trust Accounts need not be segregated in any manner except to the extent required by such Articles II and III and by law, and the Subordination Agent shall not (except as otherwise provided in Section 2.02) be liable for any interest thereon; provided, however, that any payments received or applied hereunder by the Subordination Agent shall be accounted for by the Subordination Agent so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. Section 6.05. Reliance; Agents; Advice of Counsel. The Subordination Agent 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 believed by it to be genuine and believed by it to be signed by the proper party or parties. As to the Pool Balance of any Trust as of any date, the Subordination Agent may for all purposes hereof rely on a certificate signed by any Responsible Officer of the applicable Trustee, and such certificate shall constitute full protection to the Subordination Agent for any action taken or omitted to be taken by it in good faith in reliance thereon. As to any fact or matter relating to the Liquidity Providers, the Policy Provider or the Trustees the manner of ascertainment of which is not specifically described herein, the Subordination Agent may for all purposes hereof rely on a certificate, signed by any Responsible Officer of the applicable Liquidity Provider, the Policy Provider or Trustee, as the case may be, as to such fact or matter, and such certificate shall constitute full protection to the Subordination Agent for any action taken or omitted to be taken by it in good faith in reliance thereon. In the administration of the trusts hereunder, the Subordination Agent may (a) execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and (b) consult with counsel, accountants and other skilled Persons to be selected and retained by it. The Subordination Agent shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled Persons acting within such counsel's, accountants' or Person's area of competence (so long as the Subordination Agent shall have exercised reasonable care and judgment in selecting such Persons). Section 6.06. Capacity in Which Acting. The Subordination Agent acts hereunder solely as agent or trustee herein and not in its individual capacity, except as otherwise expressly provided herein and in the Operative Agreements. Section 6.07. Compensation. The Subordination Agent shall be entitled to such compensation, including reasonable expenses and disbursements, for all services rendered 58 hereunder as Delta and the Subordination Agent may agree from time to time in writing and shall have a priority claim to the extent set forth in Article III on all monies collected hereunder for the payment of such compensation, to the extent that such compensation shall not be paid by others. The Subordination Agent agrees that it shall have no right against any Trustee, the Policy Provider or any Liquidity Provider for any fee as compensation for its services as agent under this Agreement. The provisions of this Section 6.07 shall survive the termination of this Agreement. Section 6.08. May Become Certificateholder. The institution acting as Subordination Agent hereunder may become a Certificateholder and have all rights and benefits of a Certificateholder to the same extent as if it were not the institution acting as the Subordination Agent. Section 6.09. Subordination Agent Required; Eligibility. There shall at all times be a Subordination Agent hereunder that is a Citizen of the United States, a bank, trust company or other financial institution organized and doing business under the laws of the United States or any state thereof and eligible to act as a trustee under Section 310(a) of the Trust Indenture Act of 1939, as amended, and that has a combined capital and surplus of at least $75,000,000 (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 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 $75,000,000). If such bank, trust company or other financial institution or such 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 6.09 the combined capital and surplus of such bank, trust company or other financial institution or such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time the Subordination Agent shall cease to be eligible in accordance with the provisions of this Section 6.09, the Subordination Agent shall resign immediately in the manner and with the effect specified in Section 7.01. Section 6.10. Money to Be Held in Trust. All Equipment Notes, monies and other property deposited with or held by the Subordination Agent pursuant to this Agreement shall be held in trust for the benefit of the parties entitled to such Equipment Notes, monies and other property and the Subordination Agent, in its individual capacity, hereby waives all rights of set-off and counterclaim with respect to all such property. ARTICLE VII SUCCESSOR SUBORDINATION AGENT Section 7.01. Replacement of Subordination Agent; Appointment of Successor. (a) The Subordination Agent or any successor thereto must resign if at any time it fails to comply with Section 6.09 and may resign at any time without cause by giving 60 days' 59 prior written notice to Delta, the Trustees, the Policy Provider and the Liquidity Providers. The Controlling Party shall remove the Subordination Agent if: (1) the Subordination Agent fails to comply with Section 6.09; (2) the Subordination Agent is adjudged bankrupt or insolvent or files a bankruptcy petition; (3) a receiver of the Subordination Agent shall be appointed or any public officer shall take charge or control of the Subordination Agent or its property or affairs; or (4) the Subordination Agent otherwise becomes incapable of acting. If the Subordination Agent resigns or is removed or if a vacancy exists in the office of Subordination Agent for any reason (the Subordination Agent in such event being referred to herein as the retiring Subordination Agent), the Controlling Party shall promptly appoint a successor Subordination Agent. If a successor Subordination Agent shall not have been appointed within 60 days after such notice of resignation or removal, the retiring Subordination Agent, one or more of the Trustees, the Policy Provider or one or more of the Liquidity Providers may petition any court of competent jurisdiction for the appointment of a successor Subordination Agent to act until such time, if any, as a successor shall have been appointed as provided above. A successor Subordination Agent shall deliver (x) a written acceptance of its appointment as Subordination Agent hereunder to the retiring Subordination Agent and (y) a written assumption of its obligations hereunder and under each Liquidity Facility to each party hereto, upon which the resignation or removal of the retiring Subordination Agent shall become effective, and the successor Subordination Agent shall have all the rights, powers and duties of the Subordination Agent under this Agreement. The successor Subordination Agent shall mail a notice of its succession to the Liquidity Providers, the Policy Provider and the Trustees. The retiring Subordination Agent shall promptly transfer its rights under each of the Liquidity Facilities and all of the property and all books and records, or true, complete and correct copies thereof, held by it as Subordination Agent to the successor Subordination Agent. If the Subordination Agent fails to comply with Section 6.09 (to the extent applicable), one or more of the Trustees, the Policy Provider or one or more of the Liquidity Providers may petition a court of competent jurisdiction for the removal of the Subordination Agent and the appointment of a successor Subordination Agent. Notwithstanding the foregoing, no resignation or removal of the Subordination Agent shall be effective unless and until a successor has been appointed. No appointment of a successor Subordination Agent shall be effective unless and until the Rating Agencies shall have delivered a Ratings Confirmation and so long as no Policy Provider Default has occurred and is continuing, the Policy Provider shall have consented to such successor Subordination Agent. (b) Any corporation, bank, trust company or other financial institution into which the Subordination Agent may be merged or converted or with which it may be consolidated, or 60 any corporation, bank, trust company or other financial institution resulting from any merger, conversion or consolidation to which the Subordination Agent shall be a party, or any corporation, bank, trust company or other financial institution succeeding to all or substantially all of the corporate trust business of the Subordination Agent, shall be the successor of the Subordination Agent hereunder, provided that such corporation, bank, trust company or other financial institution shall be otherwise qualified and eligible under Section 6.09, without the execution or filing of any paper or any further act on the part of any of the parties hereto. ARTICLE VIII SUPPLEMENTS AND AMENDMENTS Section 8.01. Amendments, Waivers, Etc. (a) This Agreement may not be supplemented, amended or modified without the consent of each Trustee (acting, except in the case of any amendment pursuant to Section 3.06(e)(v)(3) or Section 3.06(c)(ii) or any amendment contemplated by the last sentence of this Section 8.01(a), with the consent of holders of Certificates of the related Class evidencing Fractional Undivided Interests in the related Trust aggregating not less than a majority in interest in such Trust or as otherwise authorized pursuant to the relevant Trust Agreement (including, without limitation, without the consent of the Certificateholders to the extent permitted thereby, Section 9.01 of the Basic Agreement)), the Subordination Agent, the Policy Provider and each Liquidity Provider; provided, however, that this Agreement may be supplemented, amended or modified without the consent of any Trustee in order (i) to cure any ambiguity or omission or to correct any mistake, (ii) to correct or supplement any provision, or (iii) to make any other provision in regard to matters or questions arising hereunder that will not materially adversely affect the interests of any Trustee or the holders of the related Class of Certificates; provided further, however, that, if such supplement, amendment or modification (x) would directly or indirectly amend, modify or supersede, or otherwise conflict with, Section 2.02(b), 3.06(c), 3.06(e), 3.06(f) (other than the last sentence thereof), 3.06(l), this proviso of this Section 8.01(a), the last sentence of Section 8.01(a), or Section 9.06 (collectively, the "DELTA PROVISIONS"), (y) would otherwise adversely affect the interests of a potential Replacement Primary Liquidity Provider or of Delta with respect to its ability to replace the Primary Liquidity Facility or with respect to its payment obligations under any Operative Agreement or (z) is made pursuant to the last sentence of this Section 8.01(a), then such supplement, amendment or modification shall not be effective without the additional written consent of Delta. Notwithstanding the foregoing, without the consent of each Certificateholder affected thereby, the Policy Provider and each Liquidity Provider, no supplement, amendment or modification of this Agreement may (i) reduce the percentage of the interest in any Trust evidenced by the Certificates issued by such Trust necessary to consent to modify or amend any provision of this Agreement or to waive compliance therewith or (ii), except as provided in the last sentence of this Section 8.01(a), modify Section 2.04, 3.02 or 3.03 hereof relating to the distribution of monies received by the Subordination Agent hereunder from the Equipment Notes or pursuant to the Liquidity Facilities or the Policy. Nothing contained in this Section 8.01(a) shall require the consent of a Trustee at any time following the payment of Final Distributions with respect to the related Class of Certificates. If the Replacement Primary Liquidity Facility for the Primary Liquidity Facility is to be comprised of more than one instrument as contemplated by the definition of the term "Replacement Primary Liquidity Facility", then each party hereto agrees to amend this Agreement and the other Operative 61 Agreements to incorporate appropriate mechanics for multiple Primary Liquidity Facilities for a single Trust. (b) Subject to Section 2.06, if the Subordination Agent, as the registered holder of any Equipment Notes, receives a request for its consent to any amendment, modification, consent or waiver under such Equipment Notes, to the Indenture pursuant to which such Equipment Notes were issued or the related Participation Agreement or other related document, the Subordination Agent will exercise its voting rights as directed by the Controlling Party, subject to Section 4.01 and 4.04; provided that no such amendment, modification, consent or waiver shall (i) reduce the amount of principal or interest payable by Delta under any Equipment Note issued under any Indenture or delay the timing of any such payment, (ii) create any Lien with respect to any Collateral prior to, pari passu with or subordinate to the Lien of the related Indenture or deprive any holder of an Equipment Note issued under such Indenture of the benefit of the Lien of such Indenture upon the related Collateral, or (iii) reduce the percentage in principal amount of the outstanding Equipment Notes issued under any Indenture required to take or approve any action under such Indenture without, in the case of the preceding clauses (i), (ii) and (iii), the consent of each Liquidity Provider, the Policy Provider and the Trustee of each Trust (other than any Trust all the Certificates of which are held or beneficially owned by Delta and/or any of its Affiliates) whose Certificateholders would be affected thereby, the consent of each such Trustee to be given only at the direction of the holders of all of the Certificates Outstanding under such Trust. Section 8.02. Subordination Agent Protected. If, in the reasonable opinion of the institution acting as the Subordination Agent hereunder, any document required to be executed by it pursuant to the terms of Section 8.01 adversely affects any right, duty, immunity or indemnity with respect to such institution under this Agreement, any Liquidity Facility or the Policy, the Subordination Agent may in its discretion decline to execute such document. Section 8.03. Effect of Supplemental Agreements. Upon the execution of any amendment, consent or supplement hereto pursuant to the provisions hereof, this Agreement shall be and shall be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Agreement of the parties hereto and beneficiaries hereof shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental agreement shall be and be deemed to be part of the terms and conditions of this Agreement for any and all purposes. In executing or accepting any supplemental agreement permitted by this Article VIII, the Subordination Agent shall be entitled to receive, and shall be fully protected in relying upon, an opinion of counsel stating that the execution of such supplemental agreement is authorized or permitted by this Agreement. Section 8.04. Notices to Rating Agencies and the Policy Provider. (a) Promptly following its receipt of each amendment, consent, modification, supplement or waiver contemplated by this Article VIII, the Subordination Agent shall send a copy thereof to each Rating Agency and the Policy Provider. (b) Until such time as an Indenture Event of Default has occurred under an Indenture, the Policy Provider shall provide at least seven days prior notice to S&P and Moody's 62 of each action it intends to take with respect to such Indenture in its capacity as Controlling Party. ARTICLE IX MISCELLANEOUS Section 9.01. Termination of Intercreditor Agreement. Upon (or at any time after) payment of Final Distributions with respect to each Class of Certificates and the payment in full of all Liquidity Obligations to the Primary Liquidity Provider and all Policy Provider Obligations to the Policy Provider and provided that there shall then be no other amounts due to the Certificateholders, the Trustees, the Liquidity Providers, the Subordination Agent and the Policy Provider hereunder or under the Trust Agreements, and that the commitment of (i) the Liquidity Providers under the Liquidity Facilities and (ii) the Policy Provider under the Policy shall have expired or been terminated, this Agreement shall terminate and shall be of no further force or effect. Except as aforesaid or otherwise provided, this Agreement and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. Section 9.02. Intercreditor Agreement for Benefit of Trustees, Liquidity Providers, Policy Provider and Subordination Agent. Subject to the second sentence of Section 9.06 and the provisions of Section 4.04 and 8.01, nothing in this Agreement, whether express or implied, shall be construed to give to any Person other than the Trustees, the Liquidity Providers, the Policy Provider and the Subordination Agent any legal or equitable right, remedy or claim under or in respect of this Agreement. Section 9.03. Notices. Unless otherwise expressly specified or permitted by the terms hereof, all notices required or permitted under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by United States mail, courier service or facsimile or any other customary means of communication, and any such notice shall be effective when delivered (or, if mailed, three Business Days after deposit, postage prepaid, in the first class United States mail and, 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), if to the Subordination Agent, to: U.S. Bank Trust National Association 225 Asylum Street Goodwin Square Hartford, Connecticut 06103 Attention: Corporate Trust Division Telephone: (860) 244-1844 Telecopy: (860) 244-1881 63 if to any Trustee, to: U.S. Bank Trust National Association 225 Asylum Street Goodwin Square Hartford, Connecticut 06103 Attention: Corporate Trust Division Telephone: (860) 244-1844 Telecopy: (860) 244-1881 if to the Primary Liquidity Provider, to: Landesbank Baden-Wurttemberg Am Hauptbahnhof 2 D-70173 Stuttgart Germany Attention: Transportation Finance/Jeannine Eder Telephone: +49 (0) 711-124-9757 Telecopy: +49 (0) 711-124-9747 and Landesbank Baden-Wurttemberg, New York Branch 535 Madison Avenue 6th Floor New York, NY 10022 Attention: Claudia Rothe, Vice President or Bette Smolen, Assistant Vice President Telephone: (212) 584-1700 Telecopy: (212) 584-1729 if to the Above-Cap Liquidity Provider, to: Merrill Lynch Capital Services, Inc. Merrill Lynch World Headquarters 4 World Financial Center New York, New York 10080 Attention: Swap Group Telephone: (212) 449-7403 Telecopy: (646) 805-0218 64 if to the Policy Provider, to: Ambac Assurance Corporation One State Street Plaza New York, NY 10004 Attention: Surveillance Department Telephone: (212) 668-0340 Telecopy: (212) 363-1459 Any party, by notice to the other parties hereto, may designate additional or different addresses for subsequent notices or communications. Whenever the words "notice" or "notify" or similar words are used herein, they mean the provision of formal notice as set forth in this Section 9.03. A copy of any notice given by the Trustee, any Liquidity Provider or the Subordination Agent shall be given to the Policy Provider therewith. Section 9.04. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 9.05. No Oral Modifications or Continuing Waivers. No terms or provisions of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought and any other party or other Person whose consent is required pursuant to this Agreement and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. Section 9.06. 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. In addition, the Delta Provisions shall inure to the benefit of Delta and its successors and permitted assigns, and (without limitation of the foregoing) Delta is hereby constituted, and agreed to be, an express third party beneficiary of the Delta Provisions. Section 9.07. 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 9.08. Counterparts. This Agreement may be executed in any number of counterparts (and each party shall not be required to execute the same counterpart). Each counterpart of this Agreement including a signature page or pages executed by each of the parties hereto shall be an original counterpart of this Agreement, but all of such counterparts together constitute one instrument. Section 9.09. Subordination. (a) As among the Trustees, and as between the Liquidity Providers and the Policy Provider, on the one hand, and the Trustees and the Certificateholders, on the other hand, this Agreement shall be a subordination agreement for 65 purposes of Section 510 of the Bankruptcy Code. In addition, as among the Trustees and the Certificateholders of each Class, this Agreement shall be a subordination agreement for purposes of such Section 510. (b) Notwithstanding the provisions of this Agreement, if prior to the payment in full to (i) the Primary Liquidity Provider of all Liquidity Obligations then due and payable and (ii) the Policy Provider of all Policy Provider Obligations or prior to the distribution in full of any other amount distributable hereunder, any party hereto shall have received any payment or distribution in respect of Equipment Notes or any other amount under the Indentures or other Operative Agreements which, had the subordination provisions of this Agreement been properly applied to such payment, distribution or other amount, would not have been distributed to such Person, then such payment, distribution or other amount shall be received and held in trust by such Person and paid over or delivered to the Subordination Agent for application as provided herein. (c) If any Trustee, any Liquidity Provider, the Policy Provider or the Subordination Agent receives any payment in respect of any obligations owing or amounts distributable hereunder (or, in the case of the Primary Liquidity Provider or the Policy Provider, in respect of the Liquidity Obligations or the Policy Provider Obligations, as the case may be), which is subsequently invalidated, declared preferential, set aside and/or required to be repaid to a trustee, receiver or other party, then, to the extent of such payment, such obligations or amounts (or, in the case of the Primary Liquidity Provider or the Policy Provider, such Liquidity Obligations or the Policy Provider Obligations, as the case may be) intended to be satisfied shall be revived and continue in full force and effect as if such payment had not been received. (d) The Trustees (on behalf of themselves and the holders of Certificates), the Liquidity Providers, the Policy Provider and the Subordination Agent expressly confirm and agree that the payment priorities and subordination specified in Articles II and III shall apply in all circumstances, notwithstanding (x) the fact that the obligations owed to the Trustees are secured by certain assets and the Liquidity Obligations and the Policy Provider Obligations may not be so secured and (y) the occurrence of a Delta Bankruptcy Event or any similar event or occurrence relating to any other Person (it being expressly agreed that the payment priorities and subordination specified in Articles II and III shall apply whether or not a claim for post-petition or post-filing interest is allowed in the proceedings resulting from such Delta Bankruptcy Event or other event or occurrence). The Trustees expressly agree (on behalf of themselves and the holders of Certificates) not to assert priority over the holders of Liquidity Obligations or Policy Provider Obligations (or other obligations due to the Policy Provider hereunder) due to their status as secured creditors in any bankruptcy, insolvency or other legal proceeding. (e) Each of the Trustees (on behalf of themselves and the holders of Certificates), the Liquidity Providers, the Policy Provider and the Subordination Agent may take any of the following actions without impairing its rights under this Agreement: (i) obtain a Lien on any property to secure any amounts owing to it hereunder, including, in the case of the Primary Liquidity Provider and the Policy Provider, the Liquidity Obligations or the Policy Provider Obligations, as the case may be; 66 (ii) obtain the primary or secondary obligation of any other obligor with respect to any amounts owing to it hereunder, including, in the case of the Primary Liquidity Provider and the Policy Provider, any of the Liquidity Obligations or the Policy Provider Obligations, as the case may be; (iii) renew, extend, increase, alter or exchange any amounts owing to it hereunder, including, in the case of the Primary Liquidity Provider and the Policy Provider, any of the Liquidity Obligations or the Policy Provider Obligations, as the case may be, or release or compromise any obligation of any obligor with respect thereto; (iv) refrain from exercising any right or remedy, or delay in exercising any right or remedy, which it may have; or (v) take any other action which might discharge a subordinated party or a surety under applicable law; provided, however, that the taking of any such actions by any of the Trustees, Liquidity Providers, the Policy Provider or the Subordination Agent shall not prejudice the rights or adversely affect the obligations of any other party under this Agreement. Section 9.10. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 9.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity. (a) Each of the parties hereto, to the extent it may do so under applicable law, for purposes hereof and of all other Operative Agreements hereby (i) irrevocably submits itself to the non-exclusive jurisdiction of the courts of the State of New York sitting in the City of New York and to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto or thereto, or their successors or permitted assigns and (ii) waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by such courts. (b) EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and all other common law and statutory 67 claims. Each of the parties warrants and represents that it has reviewed this waiver with its legal counsel, and that it knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. (c) Each Liquidity Provider hereby waives any immunity it may have from the jurisdiction of the courts of the United States or of any state thereof and waives any immunity any of its properties located in the United States may have from attachment or execution upon a judgment entered by any such court under the United States Foreign Sovereign Immunities Act of 1976 or any similar successor legislation. Section 9.12. Non-Petition. Each Liquidity Provider covenants that until one year and one day after the Equipment Notes have been paid in full, it shall not acquiesce, petition or otherwise invoke or cause or join in invoking or causing any Trust or any other Person to invoke the process of any governmental authority for the purpose of commencing or sustaining a case (whether voluntary or not) against such Trust under any bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of such Trust or any substantial part of its property or ordering the winding-up or liquidation of the affairs of such Trust. 68 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized, as of the date first above written. U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee for each of the Trusts By: -------------------------------------- Name: Title: LANDESBANK BADEN-WURTTEMBERG, as Primary Liquidity Provider, By: -------------------------------------- Name: Title: By: -------------------------------------- Name: Title: MERRILL LYNCH CAPITAL SERVICES, INC., as Above-Cap Liquidity Provider By: -------------------------------------- Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Subordination Agent By: -------------------------------------- Name: Title: 69 AMBAC ASSURANCE CORPORATION, as Policy Provider By: -------------------------------------- Name: Title: 70 SCHEDULE 2.02(b) Upon the funding of any Above-Cap Account or Above-Cap Reserve Account or the maturity or redemption of any investment of funds in any such account (such funds, the "Funds"), the Above-Cap Liquidity Provider shall send a notice to the Subordination Agent containing a list of Eligible Investments (the "Specified Investments") which shall contain at least 10 investments in open market commercial paper of corporations incorporated under the laws of the United States of America or any state thereof. Following receipt of such notice, the Subordination Agent shall use its best efforts to invest or reinvest the Funds in any Specified Investment. If no Specified Investment is then available, the Subordination Agent shall invest or reinvest the Funds in any other Eligible Investment selected by the Subordination Agent. Following such investment or reinvestment of the Funds by the Subordination Agent in any Specified Investment or other Eligible Investment, the Subordination Agent shall deliver a written statement to the Above-Cap Liquidity Provider setting forth for each such Specified Investment or Eligible Investment the CUSIP number or other similar number for such obligation (or, if such obligation does not have such a number, (i) the name of the issuer, (ii) its maturity date, (iii) its yield or rate of return, and (iv) its rating, if rated by any nationally recognized rating agency). 71 EX-4.5 6 g83137exv4w5.txt REVOLVING CREDIT AGREEMENT EXHIBIT 4.5 REVOLVING CREDIT AGREEMENT (2003-1G) Dated as of January 30, 2003 between U.S. BANK TRUST NATIONAL ASSOCIATION, as Subordination Agent, as agent and trustee for the trustee of Delta Air Lines Pass Through Trust 2003-1G, as Borrower and LANDESBANK BADEN-WURTTEMBERG, as Primary Liquidity Provider Delta Air Lines Pass Through Trust 2003-1G Delta Air Lines Pass Through Certificates, Series 2003-1G TABLE OF CONTENTS
Page ARTICLE i DEFINITIONS Section 1.01. Definitions.................................................................... 1 ARTICLE ii AMOUNT AND TERMS OF THE COMMITMENT Section 2.01. The Advances................................................................... 8 Section 2.02. Making of Advances............................................................. 8 Section 2.03. Fees........................................................................... 10 Section 2.04. Reduction or Termination of the Maximum Commitment............................. 10 Section 2.05. Repayments of Interest Advances or the Final Advance........................... 11 Section 2.06. Repayments of Provider Advances................................................ 11 Section 2.07. Payments to the Primary Liquidity Provider Under the Intercreditor Agreement... 12 Section 2.08. Book Entries................................................................... 12 Section 2.09. Payments from Available Funds Only............................................. 13 ARTICLE iii OBLIGATIONS OF THE BORROWER Section 3.01. Increased Costs................................................................ 13 Section 3.02. [Intentionally omitted.]....................................................... 14 Section 3.03. Withholding Taxes.............................................................. 14 Section 3.04. Payments....................................................................... 15 Section 3.05. Computations................................................................... 16 Section 3.06. Payment on Non-Business Days................................................... 16 Section 3.07. Interest....................................................................... 16 Section 3.08. Replacement of Borrower........................................................ 17 Section 3.09. Funding Loss Indemnification................................................... 17 Section 3.10. Illegality..................................................................... 18 ARTICLE iv CONDITIONS PRECEDENT Section 4.01. Conditions Precedent to Effectiveness of Section 2.01.......................... 18 Section 4.02. Conditions Precedent to Borrowing.............................................. 20 ARTICLE v COVENANTS Section 5.01. Affirmative Covenants of the Borrower.......................................... 20
i Section 5.02. Negative Covenants of the Borrower............................................. 20 ARTICLE vi LIQUIDITY EVENTS OF DEFAULT Section 6.01. Liquidity Events of Default.................................................... 21 ARTICLE vii MISCELLANEOUS Section 7.01. No Oral Modifications or Continuing Waivers.................................... 21 Section 7.02. Notices........................................................................ 21 Section 7.03. No Waiver; Remedies............................................................ 22 Section 7.04. Further Assurances............................................................. 22 Section 7.05. Indemnification; Survival of Certain Provisions................................ 23 Section 7.06. Liability of the Primary Liquidity Provider.................................... 23 Section 7.07. Certain Costs and Expenses..................................................... 24 Section 7.08. Binding Effect; Participations................................................. 24 Section 7.09. Severability................................................................... 25 Section 7.10. Governing Law.................................................................. 25 Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity........... 25 Section 7.12. Counterparts................................................................... 26 Section 7.13. Entirety....................................................................... 26 Section 7.14. Headings....................................................................... 26 Section 7.15. Primary Liquidity Provider's Obligation to Make Advances....................... 26
Annex I - Interest Advance Notice of Borrowing Annex II - Downgrade Advance Notice of Borrowing Annex III - Final Advance Notice of Borrowing Annex IV - Notice of Termination Annex V - Notice of Replacement Subordination Agent ii REVOLVING CREDIT AGREEMENT This REVOLVING CREDIT AGREEMENT, dated as of January 30, 2003, is made by and between U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, not in its individual capacity but solely as Subordination Agent (such term and other capitalized terms used herein without definition being defined as provided in Article I) under the Intercreditor Agreement (as defined below), as agent and trustee for the Class G Trustee (in such capacity, together with its successors in such capacity, the "BORROWER"), and LANDESBANK BADEN-WURTTEMBERG, a bank established in Germany as a public law institution with legal capacity (Rechtsfahige Anstalt des Offentlichen Rechts) (the "PRIMARY LIQUIDITY PROVIDER"). W I T N E S S E T H: WHEREAS, pursuant to the Class G Trust Agreement, the Class G Trust is issuing the Class G Certificates; and WHEREAS, the Borrower, in order to support the timely payment of a portion of the interest on the Class G Certificates in accordance with their terms, has requested the Primary Liquidity Provider to enter into this Agreement, providing in part for the Borrower to request in specified circumstances that Advances be made hereunder; NOW, THEREFORE, in consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. (a) The definitions stated herein apply equally to both the singular and the plural forms of the terms defined. (b) All references in this Agreement to designated "Articles", "Sections", "Annexes" and other subdivisions are to the designated Article, Section, Annex or other subdivision of this Agreement, unless otherwise specifically stated. (c) The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, Annex or other subdivision. (d) Unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, it shall be deemed to be followed by the phrase "without limitation". (e) For the purposes of this Agreement, unless the context otherwise requires, the following capitalized terms shall have the following meanings: "ADVANCE" means an Interest Advance, a Final Advance, a Provider Advance, an Applied Provider Advance or an Unpaid Advance, as the case may be. "AGREEMENT" means this Agreement, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "APPLICABLE LIQUIDITY RATE" has the meaning specified in Section 3.07(g). "APPLICABLE MARGIN" means with respect to any Unpaid Advance or Applied Provider Advance, 1.70% per annum. "APPLIED DOWNGRADE ADVANCE" has the meaning specified in Section 2.06(a). "APPLIED PROVIDER ADVANCE" means an Applied Downgrade Advance. "BASE RATE" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for each day in the period for which the Base Rate is to be determined (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Primary Liquidity Provider from JPMorgan Chase Bank, Citibank, N.A. and Bank of America plus one-quarter of one percent (0.25%) per annum. "BASE RATE ADVANCE" means an Advance that bears interest at a rate based upon the Base Rate. "BORROWER" has the meaning specified in the introductory paragraph to this Agreement. "BORROWING" means the making of Advances requested by delivery of a Notice of Borrowing. "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on which commercial banks are required or authorized to close in New York, New York, Atlanta, Georgia, or, so long as any Class G Certificate is outstanding, the city and state in which the Class G Trustee, the Borrower or any related Loan Trustee maintains its Corporate Trust Office or receives or disburses funds. "COVERED TAXES" means any Taxes imposed by the United States or any political subdivision or taxing authority thereof or therein required by law to be deducted or withheld from any amounts payable to the Primary Liquidity Provider under this Agreement other than (i) any Tax on, based on or measured by net income, franchises or conduct of business, (ii) any Tax imposed, levied, withheld or assessed as a result of any connection between the Primary Liquidity Provider and the United States or such political subdivision or taxing authority, other than a connection arising solely from the 2 Primary Liquidity Provider's having executed, delivered, performed its obligations or received a payment under, or enforced, any Operative Agreement, (iii) any Tax attributable to the inaccuracy in or breach by the Primary Liquidity Provider of any of its representations, warranties or covenants contained in any Operative Agreement to which it is a party or the inaccuracy of any form or document furnished by it pursuant thereto, (iv) any withholding Taxes imposed by the United States except to the extent such withholding Taxes would not have been required to be deducted or withheld from payments hereunder but for a change after the date hereof (or in the case of a successor Primary Liquidity Provider (including a transferee of an Advance) after the date on which such successor Primary Liquidity Provider obtains its interest) in applicable law (excluding from "change in applicable law" for this purpose, a change in an applicable treaty or other change in law affecting the applicability of a treaty other than the applicable income tax treaty between the United States of America and the Federal Republic of Germany ("German Treaty") (except an addition to, or change in any "anti-treaty shopping", "limitation of benefits" or similar provision in such German Treaty)), (v) any withholding Taxes imposed by the United States which are imposed or increased as a result of the Primary Liquidity Provider failing to deliver to the Borrower any certificate or document (which certificate or document in the good faith judgment of the Primary Liquidity Provider, it is legally entitled to provide) which is reasonably requested by the Borrower to establish that payments under this Agreement are exempt from (or entitled to a reduced rate of) withholding Tax, or (vi) any change in the Lending Office without the prior written consent of Delta (such consent not to be unreasonably withheld). "DOWNGRADE ADVANCE" means an Advance made pursuant to Section 2.02(c). "EFFECTIVE DATE" has the meaning specified in Section 4.01. The delivery of the certificate of the Primary Liquidity Provider contemplated by Section 4.01(f) shall be conclusive evidence that the Effective Date has occurred. "EXPENSES" means liabilities, losses, damages, costs and expenses (including, without limitation, reasonable fees and disbursements of legal counsel), provided that Expenses shall not include any Taxes other than sales, use and value added taxes imposed on fees and expenses payable pursuant to Section 7.07. "EXPIRY DATE" means August 10, 2009. "FINAL ADVANCE" means an Advance made pursuant to Section 2.02(d). "INCREASED COST" has the meaning specified in Section 3.01. "INTERCREDITOR AGREEMENT" means the Intercreditor Agreement, dated as of the date hereof, among the Trustees, the Primary Liquidity Provider, the Above-Cap Liquidity Provider, the Policy Provider and the Subordination Agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. "INTEREST ADVANCE" means an Advance made pursuant to Section 2.02(a). 3 "INTEREST PERIOD" means, with respect to any LIBOR Advance, each of the following periods: (i) the period beginning on either (A) the third London/Stuttgart Business Day following the Primary Liquidity Provider's receipt of the Notice of Borrowing for such LIBOR Advance or (B) the date of the withdrawal of funds from the Primary Cash Collateral Account for the purpose of paying interest on the Class G Certificates as contemplated by Section 2.06(a) hereof and, in each case, ending on the next Regular Distribution Date; and (ii) each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the next Regular Distribution Date; provided, however, that if (x) the Final Advance shall have been made pursuant to Section 2.02(d) or (y)(I) any outstanding Advance or (II) an Unapplied Provider Advance shall have been converted into the Final Advance pursuant to Section 6.01, then the Interest Periods shall be successive periods of one month beginning on the third London/Stuttgart Business Day following the Primary Liquidity Provider's receipt of the Notice of Borrowing for such Final Advance (in the case of clause (x) above), the Regular Distribution Date following such conversion (in the case of clause (y)(I) above) or the date of such conversion (in the case of clause (y)(II) above). "LENDING OFFICE" means the lending office of the Primary Liquidity Provider presently located at Stuttgart, Germany or such other lending office as the Primary Liquidity Provider from time to time shall notify the Borrower as its lending office hereunder; provided that the Primary Liquidity Provider shall not change its Lending Office without the prior written consent of Delta (such consent not to be unreasonably withheld). "LIBOR ADVANCE" means an Advance bearing interest at a rate based upon the LIBOR Rate. "LIBOR RATE" means, with respect to any Interest Period, (a) the interest rate per annum equal to the rate at which deposits in Dollars are offered in the London interbank market as shown on Page 3750 of the Telerate Systems Incorporated screen service (or such other page as may replace Telerate Page 3750), or if such service is not available, the interest rate per annum equal to the average (rounded up, if necessary, to the nearest 1/100th of 1%) of the rates at which deposits in Dollars are offered in the London interbank market as shown on Page LIBO of the Reuters Money Service Monitor System (or such other page as may replace Reuters Page LIBO) at approximately 11:00 a.m. (London time) on the day that is two London Business Days prior to the first day of such Interest Period, for a period comparable to such Interest Period, or (b) if no such rate is published on either such service or if neither of such services is then available, the interest rate per annum equal to the average (rounded up, if necessary, to the nearest 1/100th of 1%) of the rates at which deposits in Dollars are offered by the Reference Banks (or, if fewer than all of the Reference Banks are quoting a rate for deposits in 4 Dollars for the applicable period and amount, such fewer number of Reference Banks) at approximately 11:00 a.m. (London time) on the day that is two London Business Days prior to the first day of such Interest Period to prime banks in the London interbank market for a period comparable to such Interest Period and in an amount approximately equal to the principal amount of the LIBOR Advance to be outstanding during such Interest Period, or (c) if none of the Reference Banks is quoting a rate for deposits in Dollars in the London interbank market for such a period and amount, the interest rate per annum equal to the average (rounded up, if necessary, to the nearest 1/100th of 1%) of the rates at which deposits in Dollars are offered by the principal New York offices of the Reference Banks (or, if fewer than all of the Reference Banks are quoting a rate for deposits in Dollars in the New York interbank market for the applicable period and amount, such fewer number of Reference Banks) at approximately 11:00 a.m. (New York time) on the day that is two London Business Days prior to the first day of such Interest Period to prime banks in the New York interbank market for a period comparable to such Interest Period and in an amount approximately equal to the principal amount of the LIBOR Advance to be outstanding during such Interest Period, or (d) if none of the principal New York offices of the Reference Banks is quoting a rate for deposits in Dollars in the New York interbank market for the applicable period and amount, the Base Rate. "LIQUIDITY EVENT OF DEFAULT" means the occurrence of either (a) the Acceleration of all of the Equipment Notes or (b) a Delta Bankruptcy Event. "LIQUIDITY INDEMNITEE" means the Primary Liquidity Provider, its directors, officers, employees and agents, and its successors and permitted assigns. "LONDON BUSINESS DAY" means any day on which commercial banks are open for general business in London, England. "LONDON/STUTTGART BUSINESS DAY" means any day on which commercial banks are open for general business in London, England and Stuttgart, Germany. "MAXIMUM AVAILABLE COMMITMENT" means, subject to the proviso contained in the third sentence of Section 2.02(a), at any time of determination, (a) the Maximum Commitment at such time less (b) the aggregate amount of each Interest Advance outstanding at such time; provided that following a Provider Advance or a Final Advance, the Maximum Available Commitment shall be zero. "MAXIMUM COMMITMENT" means initially $75,217,115.51, as the same may be reduced from time to time in accordance with Section 2.04(a). "NOTICE OF BORROWING" has the meaning specified in Section 2.02(e). "NOTICE OF REPLACEMENT SUBORDINATION AGENT" has the meaning specified in Section 3.08. "PARTICIPATION" has the meaning specified in Section 7.08(b). 5 "PERFORMING NOTE DEFICIENCY" means any time that less than 65% of the then aggregate outstanding principal amount of all Equipment Notes are Performing Equipment Notes. "PERMITTED TRANSFEREE" means any Person that: (a) is not a commercial air carrier, Delta or any affiliate of Delta; and (b) is any one of: (1) a commercial banking institution organized under the laws of the United States or any state thereof or the District of Columbia; (2) a commercial banking institution that (x) is organized under the laws of France, Germany, The Netherlands, Switzerland or the United Kingdom, (y) is entitled on the date it acquires any Participation to a complete exemption from United States federal income taxes for all income derived by it from the transactions contemplated by the Operative Agreements under an income tax treaty, as in effect on such date, between the United States and such jurisdiction of its organization and (z) is engaged in the active conduct of a banking business in such jurisdiction of its organization, holds its Participation in connection with such banking business in such jurisdiction and is regulated as a commercial banking institution by the appropriate regulatory authorities in such jurisdiction; or (3) a commercial banking institution that (x) is organized under the laws of Canada, France, Germany, Ireland, Japan, Luxembourg, The Netherlands, Sweden, Switzerland or the United Kingdom and (y) is entitled on the date it acquires any Participation to a complete exemption from withholding of United States federal income taxes for all income derived by it from the transactions contemplated by the Operative Agreements under laws as in effect on such date by reason of such income being effectively connected with the conduct of a trade or business within the United States. "PRIMARY LIQUIDITY PROVIDER" has the meaning specified in the introductory paragraph to this Agreement. "PROVIDER ADVANCE" means a Downgrade Advance. "REFERENCE BANKS" means the principal London offices of: Landesbank Baden-Wurttemberg; J.P. Morgan Chase Bank; Citibank, N.A.; and such other or additional banking institutions as may be designated from time to time by mutual agreement of Delta and the Primary Liquidity Provider. "REGULATORY CHANGE" means the enactment, adoption or promulgation, after the date of this Agreement, of any law or regulation by a United States federal or state government or by the German federal government or the state of the Primary Liquidity 6 Provider's organization, or any change, after the date of this Agreement, in any such law or regulation, or in the interpretation thereof by any governmental authority, central bank or comparable agency of the United States or Germany charged with responsibility for the administration or application thereof, that shall impose, modify or deem applicable: (a) any reserve, special deposit or similar requirement against extensions of credit or other assets of, or deposits with or other liabilities of, the Primary Liquidity Provider including, or by reason of, the Advances, or (b) any capital adequacy requirement requiring the maintenance by the Primary Liquidity Provider of additional capital in respect of any Advances or the Primary Liquidity Provider's obligation to make any such Advances. "REPLENISHMENT AMOUNT" has the meaning specified in Section 2.06(b). "REQUIRED AMOUNT" means, for any day, the sum of the aggregate amount of interest, calculated at the rate per annum equal to the Capped Interest Rate for the Class G Certificates on the basis of a year of 360 days for the actual number of days elapsed, that would be payable on the Class G Certificates on each of the six successive quarterly Regular Distribution Dates immediately following such day or, if such day is a Regular Distribution Date, on such day and the succeeding five quarterly Regular Distribution Dates, in each case calculated on the basis of the Pool Balance of the Class G Certificates on such day and without regard to expected future distributions of principal on the Class G Certificates. Notwithstanding the above, in the event of a Policy Provider Election with respect to a Series G Equipment Note, the Pool Balance, for purposes of this definition, shall be deemed to be reduced by an amount (if positive) by which (a) the then outstanding principal balance of such Series G Equipment Note shall exceed (b) the amount of any policy drawings previously paid by the Policy Provider in respect of principal on such Series G Equipment Note. "TERMINATION DATE" means the earliest to occur of the following: (i) the Expiry Date; (ii) the date on which the Borrower delivers to the Primary Liquidity Provider and the Policy Provider a certificate, signed by a Responsible Officer of the Borrower, certifying that all of the Class G Certificates have been paid in full (or provision has been made for such payment in accordance with the Intercreditor Agreement and the Class G Trust Agreement) or are otherwise no longer entitled to the benefits of this Agreement; (iii) the date on which the Borrower delivers to the Primary Liquidity Provider and the Policy Provider a certificate, signed by a Responsible Officer of the Borrower, certifying that a Replacement Primary Liquidity Facility has been substituted for this Agreement in full pursuant to Section 3.06(e) of the Intercreditor Agreement; (iv) the fifth Business Day following the receipt by the Borrower and the Policy Provider of a Termination Notice from the Primary Liquidity Provider pursuant to Section 6.01; and (v) the date on which no Advance is or may (including by reason of reinstatement as herein provided) become available for a Borrowing hereunder. "TERMINATION NOTICE" means the Notice of Termination substantially in the form of Annex IV to this Agreement. 7 "UNAPPLIED PROVIDER ADVANCE" means any Provider Advance other than an Applied Provider Advance. "UNPAID ADVANCE" has the meaning specified in Section 2.05. For the purposes of this Agreement, the following terms shall have the respective meanings specified in the Intercreditor Agreement: "Above-Cap Liquidity Provider", "Acceleration", "Break Amount", "Capped Interest Rate", "Certificate", "Class C Certificates", "Class D Certificates", "Class G Certificates", "Class G Certificateholders", "Class G Trust", "Class G Trust Agreement", "Class G Trustee", "Closing Date", "Collection Account", "Controlling Party", "Corporate Trust Office", "Delta", "Delta Bankruptcy Event", "Dollars", "Downgraded Facility", "Equipment Notes", "Fee Letter", "Indenture", "Initial Class C Holder", "Initial Class D Holder", "Initial Purchasers", "Investment Earnings", "Loan Trustee", "Make-Whole Amount", "Moody's", "Operative Agreements", "Participation Agreements", "Performing Equipment Note", "Person", "Policy Provider", "Policy Provider Election", "Pool Balance", "Primary Cash Collateral Account", "Primary Liquidity Facility", "Rating Agencies", "Regular Distribution Date", "Replacement Primary Liquidity Facility", "Responsible Officer", "Scheduled Payment", "Series G Equipment Note", "Special Payment", "S&P", "Stated Interest Rate", "Subordination Agent", "Taxes", "Threshold Rating", "Trust Agreement", "Trustee", and "United States". ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT Section 2.01. The Advances. The Primary Liquidity Provider hereby irrevocably agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until 12:00 noon (New York City time) on the Expiry Date (unless the obligations of the Primary Liquidity Provider shall be earlier terminated in accordance with the terms of Section 2.04(b)) in an aggregate amount at any time outstanding not to exceed the Maximum Commitment. Section 2.02. Making of Advances. (a) Each Interest Advance shall be made by the Primary Liquidity Provider upon delivery to the Primary Liquidity Provider (with a copy to the Policy Provider) of a written and completed Notice of Borrowing in substantially the form of Annex I, signed by a Responsible Officer of the Borrower, such Interest Advance to be in an amount not exceeding the Maximum Available Commitment at such time and used solely for the payment when due of interest with respect to the Class G Certificates at the Stated Interest Rate therefor in accordance with Section 3.06(a) and 3.06(b) of the Intercreditor Agreement. Each Interest Advance made hereunder shall automatically reduce the Maximum Available Commitment and the amount available to be borrowed hereunder by subsequent Advances by the amount of such Interest Advance (subject to reinstatement as provided in the next sentence). Subject to the provisions of Section 3.06(g) of the Intercreditor Agreement, upon repayment to 8 the Primary Liquidity Provider in full or in part of the amount of any Interest Advance made pursuant to this Section 2.02(a), together with accrued interest thereon (as provided herein), the Maximum Available Commitment shall be reinstated by an amount equal to the amount of such Interest Advance so repaid, but not to exceed the Maximum Commitment; provided, however, that the Maximum Available Commitment shall not be so reinstated at any time if (x) both a Performing Note Deficiency exists and a Liquidity Event of Default shall have occurred and be continuing or (y) a Final Drawing shall have occurred. (b) [Reserved] (c) A Downgrade Advance shall be made by the Primary Liquidity Provider (as provided for in Section 3.06(c) of the Intercreditor Agreement) if at any time the short-term unsecured debt rating (in the case of Moody's) or short-term issuer credit rating (in the case of S&P) of the Primary Liquidity Provider issued by Moody's or S&P, respectively, (or if the Primary Liquidity Provider does not have a short-term unsecured debt rating or short-term issuer credit rating, as applicable, issued by a given Rating Agency, the long-term unsecured debt rating (in the case of Moody's) or long-term issuer credit rating (in the case of S&P) of the Primary Liquidity Provider issued by such Rating Agency) is lower than the applicable Threshold Rating unless a Replacement Primary Liquidity Facility to replace this Agreement shall have been previously delivered to the Borrower in accordance with said Section 3.06(c), upon delivery to the Primary Liquidity Provider (with a copy to the Policy Provider) of a written and completed Notice of Borrowing in substantially the form of Annex II, signed by a Responsible Officer of the Borrower, in an amount equal to the Maximum Available Commitment at such time, and shall be used to fund the Primary Cash Collateral Account in accordance with Sections 3.06(c) and 3.06(f) of the Intercreditor Agreement. (d) A Final Advance shall be made by the Primary Liquidity Provider following the receipt by the Borrower of a Termination Notice from the Primary Liquidity Provider pursuant to Section 6.01 upon delivery to the Primary Liquidity Provider (with a copy to the Policy Provider) of a written and completed Notice of Borrowing in substantially the form of Annex III, signed by a Responsible Officer of the Borrower, in an amount equal to the Maximum Available Commitment at such time, and shall be used to fund the Primary Cash Collateral Account (in accordance with Sections 3.06(f) and 3.06(i) of the Intercreditor Agreement). (e) Each Borrowing shall be made on notice in writing (a "NOTICE OF BORROWING") in substantially the form required by Section 2.02(a), 2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Primary Liquidity Provider (with a copy to the Policy Provider). If a Notice of Borrowing is delivered by the Borrower in respect of any Borrowing no later than 1:00 p.m. (New York City time) on a Business Day, upon satisfaction of the conditions precedent set forth in Section 4.02 with respect to a requested Borrowing, the Primary Liquidity Provider shall make available to the Borrower, in accordance with its payment instructions, the amount of such Borrowing in Dollars and immediately available funds, before 4:00 p.m. (New York City time) on such Business Day or before 1:00 p.m. (New York City time) on such later Business Day specified in such Notice of Borrowing. If a Notice of Borrowing is delivered by the Borrower in respect of any Borrowing after 1:00 p.m. (New York City time) on a Business Day, upon satisfaction of the conditions precedent set forth in Section 4.02 with respect to a requested Borrowing, the Primary Liquidity Provider shall make available to the Borrower, in accordance 9 with its payment instructions, the amount of such Borrowing in Dollars and immediately available funds, before 1:00 p.m. (New York City time) on the first Business Day next following the day of receipt of such Notice of Borrowing or on such later Business Day specified by the Borrower in such Notice of Borrowing. Payments of proceeds of a Borrowing shall be made by wire transfer of immediately available funds to the Borrower in accordance with such wire transfer instructions as the Borrower shall furnish from time to time to the Primary Liquidity Provider for such purpose. Each Notice of Borrowing shall be irrevocable and binding on the Borrower. Each Notice of Borrowing shall be effective upon delivery of a copy thereof to the Primary Liquidity Provider's New York branch (with a copy to the Lending Office) at the address specified pursuant to the terms of Section 7.02 hereof. (f) Upon the making of any Advance requested pursuant to a Notice of Borrowing in accordance with the Borrower's payment instructions, the Primary Liquidity Provider shall be fully discharged of its obligation hereunder with respect to such Notice of Borrowing, and the Primary Liquidity Provider shall not thereafter be obligated to make any further Advances hereunder in respect of such Notice of Borrowing to the Borrower or to any other Person (including the Trustee or any Class G Certificateholder). If the Primary Liquidity Provider makes an Advance requested pursuant to a Notice of Borrowing before 12:00 noon (New York City time) on the second Business Day after the date of payment specified in Section 2.02(e), the Primary Liquidity Provider shall have fully discharged its obligations hereunder with respect to such Advance and an event of default shall not have occurred hereunder. Following the making of any Advance pursuant to Section 2.02(c) or 2.02(d) to fund the Primary Cash Collateral Account, the Primary Liquidity Provider shall have no interest in or rights to the Primary Cash Collateral Account, such Advance or any other amounts from time to time on deposit in the Primary Cash Collateral Account; provided that the foregoing shall not affect or impair the obligations of the Subordination Agent to make the distributions contemplated by Section 3.06(e) or 3.06(f) of the Intercreditor Agreement and provided further, that the foregoing shall not affect or impair the rights of the Primary Liquidity Provider to provide written instructions with respect to the investment and reinvestment of amounts in the Primary Cash Collateral Account to the extent provided in Section 2.02(b) of the Intercreditor Agreement. By paying to the Borrower proceeds of Advances requested by the Borrower in accordance with the provisions of this Agreement, the Primary Liquidity Provider makes no representation as to, and assumes no responsibility for, the correctness or sufficiency for any purpose of the amount of the Advances so made and requested. Section 2.03. Fees. The Borrower agrees to pay to the Primary Liquidity Provider the fees set forth in the Fee Letter. Section 2.04. Reduction or Termination of the Maximum Commitment. (a) Automatic Reduction. Promptly following each date on which the Required Amount is reduced as a result of a reduction in the Capped Interest Rate or the Pool Balance of the Class G Certificates (including upon any Policy Provider Election with respect to a Series G Equipment Note) or otherwise, the Maximum Commitment shall automatically be reduced to an amount equal to such reduced Required Amount (as calculated by the Borrower). The Borrower shall give notice of any such automatic reduction of the Maximum Commitment to the Primary Liquidity Provider, the Policy Provider and Delta within two Business Days thereof. The failure by the Borrower to furnish any such notice shall not affect such automatic reduction of the Maximum Commitment. 10 (b) Termination. Upon the making of any Provider Advance or the making or conversion to a Final Advance hereunder or the occurrence of the Termination Date, the obligation of the Primary Liquidity Provider to make further Advances hereunder shall automatically and irrevocably terminate, and the Borrower shall not be entitled to request any further Borrowing hereunder. Section 2.05. Repayments of Interest Advances or the Final Advance. Subject to Sections 2.06, 2.07 and 2.09 hereof, the Borrower hereby agrees, without notice of an Advance or demand for repayment from the Primary Liquidity Provider (which notice and demand are hereby waived by the Borrower), to pay, or to cause to be paid, to the Primary Liquidity Provider on each date on which the Primary Liquidity Provider shall make an Interest Advance or the Final Advance, an amount equal to (a) the amount of such Advance (any such Advance, until repaid, is referred to herein as an "UNPAID ADVANCE"), plus (b) interest on the amount of each such Unpaid Advance in the amounts and on the dates determined as provided in Section 3.07; provided that if (i) the Primary Liquidity Provider shall make a Provider Advance at any time after making one or more Interest Advances which shall not have been repaid in accordance with this Section 2.05 or (ii) this Primary Liquidity Facility shall become a Downgraded Facility at any time when unreimbursed Interest Advances have reduced the Maximum Available Commitment to zero, then such Interest Advances shall cease to constitute Unpaid Advances and shall be deemed to have been changed into an Applied Downgrade Advance for all purposes of this Agreement (including, without limitation, for the purpose of determining when such Interest Advance is required to be repaid to the Primary Liquidity Provider in accordance with Section 2.06 and for the purposes of Section 2.06(b)). The Borrower and the Primary Liquidity Provider agree that the repayment in full of each Interest Advance and Final Advance on the date such Advance is made is intended to be a contemporaneous exchange for new value given to the Borrower by the Primary Liquidity Provider. For the avoidance of doubt, interest payable on an Interest Advance or the Final Advance shall not be regarded as overdue unless such interest is not paid when due under Section 3.07. Section 2.06. Repayments of Provider Advances. (a) Amounts advanced hereunder in respect of a Provider Advance shall be deposited in the Primary Cash Collateral Account and invested and withdrawn from the Primary Cash Collateral Account as set forth in Sections 3.06(c)(i), 3.06(d), 3.06(e) and 3.06(f) of the Intercreditor Agreement. Subject to Sections 2.07 and 2.09, the Borrower agrees to pay to the Primary Liquidity Provider, on each Regular Distribution Date, commencing on the first Regular Distribution Date after the making of a Provider Advance, interest on the principal amount of any such Provider Advance, in the amounts determined as provided in Section 3.07; provided, however, that amounts in respect of a Provider Advance withdrawn from the Primary Cash Collateral Account for the purpose of paying interest on the Class G Certificates in accordance with Section 3.06(f) of the Intercreditor Agreement (the amount of any such withdrawal being, an "APPLIED DOWNGRADE ADVANCE" or an "APPLIED PROVIDER ADVANCE") shall thereafter (subject to Section 2.06(b)) be treated as an Interest Advance under this Agreement for purposes of determining the Applicable Liquidity Rate for interest payable thereon and the dates on which such interest is payable; provided further, however, that if, following the making of a Provider Advance, the Primary Liquidity Provider delivers a Termination Notice to the Borrower and the Policy Provider pursuant to Section 6.01, such Provider Advance shall thereafter be treated as a Final Advance under this Agreement for purposes of determining the Applicable Liquidity Rate for interest payable 11 thereon and the dates on which such interest is payable. Subject to Sections 2.07 and 2.09 hereof, immediately upon the withdrawal of any amounts from the Primary Cash Collateral Account on account of a reduction in the Required Amount, the Borrower shall repay to the Primary Liquidity Provider a portion of the Provider Advances in a principal amount equal to such reduction, plus interest on the principal amount prepaid as provided in Section 3.07. (b) At any time when an Applied Provider Advance (or any portion thereof) is outstanding, upon the deposit in the Primary Cash Collateral Account of any amount pursuant to clause "third" of Section 2.04(b) of the Intercreditor Agreement, clause "third" of Section 3.02 of the Intercreditor Agreement or clause "fourth" of Section 3.03 of the Intercreditor Agreement (any such amount being a "REPLENISHMENT AMOUNT") for the purpose of replenishing or increasing the balance thereof up to the Required Amount at such time, (i) the aggregate outstanding principal amount of all Applied Provider Advances (and of Provider Advances treated as an Interest Advance for purposes of determining the Applicable Liquidity Rate for interest payable thereon) shall be automatically reduced by the amount of such Replenishment Amount, and (ii) the aggregate outstanding principal amount of all Unapplied Provider Advances shall be automatically increased by the amount of such Replenishment Amount. (c) Upon the provision of a Replacement Primary Liquidity Facility in replacement of this Agreement in accordance with Section 3.06(e) of the Intercreditor Agreement, as provided in Section 3.06(f)(iii) of the Intercreditor Agreement, amounts remaining on deposit in the Primary Cash Collateral Account after giving effect to any Applied Provider Advance on the date of such replacement shall be reimbursed to the Primary Liquidity Provider, but only to the extent such amounts are necessary to repay in full to the Primary Liquidity Provider all amounts owing to it hereunder. Section 2.07. Payments to the Primary Liquidity Provider Under the Intercreditor Agreement. In order to provide for payment or repayment to the Primary Liquidity Provider of any amounts hereunder, the Intercreditor Agreement provides that amounts available and referred to in Articles II and III of the Intercreditor Agreement, to the extent payable to the Primary Liquidity Provider pursuant to the terms of the Intercreditor Agreement (including, without limitation, Section 3.06(f) of the Intercreditor Agreement), shall be paid to the Primary Liquidity Provider in accordance with the terms thereof (but, for the avoidance of doubt, without duplication of or increase in any amounts payable hereunder). Amounts so paid to, and not required to be returned by, the Primary Liquidity Provider shall be applied by the Primary Liquidity Provider in the order of priority required by the applicable provisions of Articles II and III of the Intercreditor Agreement and shall discharge in full the corresponding obligations of the Borrower hereunder. Section 2.08. Book Entries. The Primary Liquidity Provider shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower resulting from Advances made from time to time and the amounts of principal and interest payable hereunder and paid from time to time in respect thereof; provided, however, that the failure by the Primary Liquidity Provider to maintain such account or accounts shall not affect the obligations of the Borrower in respect of Advances. 12 Section 2.09. Payments from Available Funds Only. All payments to be made by the Borrower under this Agreement shall be made only from the amounts that constitute Scheduled Payments, Special Payments and other payments under the Operative Agreements, including payment under Section 4.02 of the Participation Agreements and payments under Section 2.14 of the Indentures, and only to the extent that the Borrower shall have sufficient income or proceeds therefrom to enable the Borrower to make payments in accordance with the terms hereof after giving effect to the priority of payments provisions set forth in the Intercreditor Agreement. The Primary Liquidity Provider agrees that it will look solely to such amounts to the extent available for distribution to it as provided in the Intercreditor Agreement and this Agreement and that the Borrower, in its individual capacity, is not personally liable to it for any amounts payable or liability under this Agreement except as expressly provided in this Agreement, the Intercreditor Agreement or any Participation Agreement. Amounts on deposit in the Primary Cash Collateral Account shall be available to the Borrower to make payments under this Agreement only to the extent and for the purposes expressly contemplated in Section 3.06(f) of the Intercreditor Agreement. ARTICLE III OBLIGATIONS OF THE BORROWER Section 3.01. Increased Costs. If as a result of any Regulatory Change there shall be any increase by an amount reasonably deemed by the Primary Liquidity Provider to be material in the actual cost to the Primary Liquidity Provider of making, funding or maintaining any Advances or its obligation to make any such Advances or there shall be any reduction by an amount reasonably deemed by the Primary Liquidity Provider to be material in the amount receivable by the Primary Liquidity Provider under this Agreement or the Intercreditor Agreement in respect thereof, and in case of either such an increase or reduction, such event does not arise from the gross negligence or willful misconduct of the Primary Liquidity Provider, from its breach of any of its representations, warranties, covenants or agreements contained herein or in the Intercreditor Agreement or from its failure to comply with any such Regulatory Change (any such increase or reduction being referred to herein as an "INCREASED COST"), then the Borrower shall from time to time pay to the Primary Liquidity Provider an amount equal to such Increased Cost within 15 Business Days after delivery to the Borrower and Delta of a certificate of an officer of the Primary Liquidity Provider describing in reasonable detail the event by reason of which it claims such Increased Cost and the basis for the determination of the amount of such Increased Cost; provided that, the Borrower shall be obligated to pay amounts only with respect to any Increased Costs accruing from the date 45 days prior to the date of delivery of such certificate. Such certificate, in the absence of manifest error, shall be considered prima facie evidence of the amount of the Increased Costs for purposes of this Agreement; provided that any determinations and allocations by the Primary Liquidity Provider of the effect of any Regulatory Change on the costs of maintaining the Advances are made on a reasonable basis. The Primary Liquidity Provider shall not be entitled to assert any claim under this Section 3.01 in respect of or attributable to Taxes. The Primary Liquidity Provider will notify the Borrower and Delta as promptly as practicable of any event occurring after the date of this Agreement that will entitle the Primary Liquidity Provider to compensation under this Section 3.01, which notice shall describe in reasonable detail the calculation of amounts owed under this 13 Section 3.01. The Primary Liquidity Provider agrees to investigate all commercially reasonable alternatives for reducing any Increased Costs and to use all commercially reasonable efforts (consistent with applicable legal and regulatory restrictions) to avoid or minimize, to the greatest extent possible, any claim in respect of Increased Costs, including, without limitation, by designating a different Lending Office, if such designation or other action would avoid the need for, or reduce the amount of, any such claim; provided that the foregoing shall not obligate the Primary Liquidity Provider to take any action that would, in its reasonable judgment, cause the Primary Liquidity Provider to incur any material loss or cost, unless the Borrower or Delta agrees to reimburse the Primary Liquidity Provider therefor. If no such designation or other action is effected, or, if effected, fails to avoid the need for any claim in respect of Increased Costs, Delta may arrange for a Replacement Primary Liquidity Facility in accordance with Section 3.06(e) of the Intercreditor Agreement. Notwithstanding the foregoing provisions, in no event shall the Borrower be required to make payments under this Section 3.01: (a) in respect of any Regulatory Change proposed by any applicable governmental authority (including any branch of a legislature), central bank or comparable agency of the United States or the Primary Liquidity Provider's jurisdiction of organization and pending as of the date of this Agreement (it being agreed that the consultative paper issued by the Basel Committee on Banking Supervision entitled "The New Basel Capital Accord", dated January 2001, shall not be considered to have been proposed or pending as of the date of this Agreement); (b) if a claim hereunder in respect of an Increased Cost arises through circumstances peculiar to the Primary Liquidity Provider and that do not affect similarly organized commercial banking institutions in the same jurisdiction generally that are in compliance with the law, rule, regulation or interpretation giving rise to the Regulatory Change relating to such Increased Cost; (c) if the Primary Liquidity Provider shall fail to comply with its obligations under this Section 3.01; or (d) if the Primary Liquidity Provider is not also seeking payment for similar increased costs in other similarly situated transactions. Section 3.02. [Intentionally omitted.] Section 3.03. Withholding Taxes. (a) All payments made by the Borrower under this Agreement shall be made without deduction or withholding for or on account of any Taxes, unless such deduction or withholding is required by law. If any Taxes are so required to be withheld or deducted from any amounts payable to the Primary Liquidity Provider under this Agreement, the Borrower shall pay to the relevant authorities the full amount so required to be deducted or withheld and, if such Taxes are Covered Taxes, pay to the Primary Liquidity Provider such additional amounts as shall be necessary to ensure that the net amount actually received by the Primary Liquidity Provider (after deduction or withholding of all Covered Taxes) shall be equal to the full amount that would have been received by the Primary Liquidity Provider had no withholding or deduction of Covered Taxes been required. The Primary Liquidity Provider agrees to use reasonable efforts (consistent with applicable legal and regulatory restrictions) to change the jurisdiction of its Lending Office if making such change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of the Primary Liquidity Provider, be otherwise materially disadvantageous to the Primary Liquidity Provider. If the Primary Liquidity Provider receives a refund of, or realizes a net Tax benefit not otherwise available to it as a result of, any Taxes for which additional amounts were paid by the Borrower pursuant to 14 this Section 3.03, the Primary Liquidity Provider shall pay to the Borrower (for deposit into the Collection Account) the amount of such refund (and any interest thereon) or net benefit. The Primary Liquidity Provider will (i) provide (on its behalf and on behalf of any participant holding a Participation pursuant to Section 7.08) to the Borrower (x) on or prior to the Effective Date two valid completed and executed copies of Internal Revenue Service Form W8-BEN or W8-EC1 (whichever is applicable), including thereon a valid U.S. taxpayer identification number (or, with respect to any such participant, such other form or documentation as may be applicable) covering all amounts receivable by it in connection with the transactions contemplated by the Operative Agreements and (y) thereafter from time to time such additional forms or documentation as may be necessary to establish an available exemption from withholding of United States Tax on payments hereunder so that such forms or documentation are effective for all periods during which it is the Primary Liquidity Provider and (ii) provide timely notice to the Borrower if any such form or documentation is or becomes inaccurate. The Primary Liquidity Provider shall deliver to the Borrower such other forms or documents as may be reasonably requested by the Borrower or required by applicable law to establish that payments hereunder are exempt from or entitled to a reduced rate of Covered Taxes. (b) All payments (including, without limitation, Advances) made by the Primary Liquidity Provider under this Agreement shall be made free and clear of, and without reduction for or on account of, any Taxes. If any Taxes are required to be withheld or deducted from any amounts payable to the Borrower under this Agreement, the Primary Liquidity Provider shall (i) within the time prescribed therefor by applicable law pay to the appropriate governmental or taxing authority the full amount of any such Taxes (and any additional Taxes in respect of the additional amounts payable under clause (ii) hereof) and make such reports or returns in connection therewith at the time or times and in the manner prescribed by applicable law, and (ii) pay to the Borrower an additional amount which (after deduction of all such Taxes) will be sufficient to yield to the Borrower the full amount which would have been received by it had no such withholding or deduction been made. Within 30 days after the date of each payment under this Section 3.03(b), the Primary Liquidity Provider shall furnish to the Borrower the original or a certified copy of (or other documentary evidence of) the payment of the Taxes applicable to such payment. If any exemption from, or reduction in the rate of, any Taxes required to be borne by the Primary Liquidity Provider under this Section 3.03(b) is reasonably available to the Borrower without providing any information regarding the holders or beneficial owners of the Certificates, the Borrower shall deliver the Primary Liquidity Provider such form or forms and such other evidence of the eligibility of the Borrower for such exemption or reductions (but without any requirement to provide any information regarding the holders or beneficial owners of the Certificates) as the Primary Liquidity Provider may reasonably identify to the Borrower as being required as a condition to exemption from, or reduction in the rate of, such Taxes. Section 3.04. Payments. The Borrower shall make or cause to be made each payment to the Primary Liquidity Provider under this Agreement so as to cause the same to be received by the Primary Liquidity Provider not later than 1:00 p.m. (New York City time) on the day when due. The Borrower shall make all such payments in Dollars, to the Primary Liquidity Provider in immediately available funds, by wire transfer to Deutsche Bank Trust Co. Americas, New York, 15 ABA No. 021001033; Swift Code: BKTR US 33; Account Holder: Landesbank Baden-Wurttemberg, Stuttgart; Account No. 04-095-107; Swift Code: SOLADEST; Reference: 4921 Loan Administration, Delta EETC 2003-1, or such other account as the Primary Liquidity Provider shall notify the Borrower. Section 3.05. Computations. All computations of interest based on the Base Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the LIBOR Rate shall be made on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Section 3.06. Payment on Non-Business Days. Whenever any payment to be made hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and no additional interest shall be due as a result (and if so made, shall be deemed to have been made when due). If any payment in respect of interest on an Advance is so deferred to the next succeeding Business Day, such deferral shall not delay the commencement of the next Interest Period for such Advance (if such Advance is a LIBOR Advance) or reduce the number of days for which interest will be payable on such Advance on the next interest payment date for such Advance. Section 3.07. Interest. (a) Subject to Sections 2.07 and 2.09, the Borrower shall pay, or shall cause to be paid, without duplication, interest on (i) the unpaid principal amount of each Advance from and including the date of such Advance (or, in the case of an Applied Provider Advance, from and including the date on which the amount thereof was withdrawn from the Primary Cash Collateral Account to pay interest on the Class G Certificates) to but excluding the date such principal amount shall be paid in full (or, in the case of an Applied Provider Advance, the date on which the Primary Cash Collateral Account is fully replenished in respect of such Advance) and (ii) any other amount due hereunder (whether fees, commissions, expenses or other amounts or, to the extent permitted by law, installments of interest on Advances or any such other amount) that is not paid when due (whether at stated maturity, by acceleration or otherwise) from and including the due date thereof to but excluding the date such amount is paid in full, in each such case, at the interest rate per annum for each day equal to the Applicable Liquidity Rate (as defined below) for such Advance or such other amount, as the case may be, as in effect for such day, but in no event at a rate per annum greater than the maximum rate permitted by applicable law, provided, however, that, if at any time the otherwise applicable interest rate as set forth in this Section 3.07 shall exceed the maximum rate permitted by applicable law, then to the maximum extent permitted by applicable law any subsequent reduction in such interest rate will not reduce the rate of interest payable pursuant to this Section 3.07 below the maximum rate permitted by applicable law until the total amount of interest accrued equals the absolute amount of interest that would have accrued (without additional interest thereon) if such otherwise applicable interest rate as set forth in this Section 3.07 had at all relevant times been in effect. Nothing contained in this Section 3.07 shall require the Borrower to pay any amount under this Section 3.07 other than as specified in Section 2.09. (b) Except as provided in Section 3.07(e), each Advance will be either a Base Rate Advance or a LIBOR Advance as provided in this Section 3.07. Each such Advance will be a Base Rate Advance for the period from the date of its borrowing to (but excluding) the third 16 London/Stuttgart Business Day following the Primary Liquidity Provider's receipt of the Notice of Borrowing for such Advance. Thereafter, such Advance shall be a LIBOR Advance. (c) Each LIBOR Advance shall bear interest during each Interest Period at a rate per annum equal to the LIBOR Rate for such Interest Period plus the Applicable Margin for such LIBOR Advance, payable in arrears on the last day of such Interest Period and, in the event of the payment of principal of such LIBOR Advance on a day other than such last day, on the date of such payment (to the extent of interest accrued on the amount of principal repaid). (d) Each Base Rate Advance shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Margin for such Base Rate Advance, payable in arrears on each Regular Distribution Date and, in the event of the payment of principal of such Base Rate Advance on a day other than a Regular Distribution Date, on the date of such payment (to the extent of interest accrued on the amount of principal repaid). (e) Each outstanding Unapplied Provider Advance shall bear interest in an amount equal to the Investment Earnings on amounts on deposit in the Primary Cash Collateral Account from time to time, payable in arrears on each Regular Distribution Date. A Final Advance resulting from the conversion of any Advance or an Unapplied Provider Advance pursuant to Section 6.01 shall always be a LIBOR Advance. Each Applied Provider Advance shall always be a LIBOR Advance. (f) Each amount not paid when due hereunder (whether fees, commissions, expenses or other amounts or, to the extent permitted by applicable law, installments of interest on Advances but excluding Advances) shall bear interest at a rate per annum equal to the Base Rate plus 2.00% per annum until paid. (g) Each change in the Base Rate shall become effective immediately. The rates of interest specified in this Section 3.07 with respect to any Advance or other amount shall be referred to as the "APPLICABLE LIQUIDITY RATE". Section 3.08. Replacement of Borrower. Subject to Section 5.02, from time to time and subject to the successor Borrower's meeting the eligibility requirements set forth in Section 6.09 of the Intercreditor Agreement applicable to the Subordination Agent, upon the effective date and time specified in a written and completed Notice of Replacement Subordination Agent in substantially the form of Annex V (a "NOTICE OF REPLACEMENT SUBORDINATION AGENT") delivered to the Primary Liquidity Provider and the Policy Provider by the then Borrower, the successor Borrower designated therein shall become the Borrower for all purposes hereunder. Section 3.09. Funding Loss Indemnification. The Borrower shall pay to the Primary Liquidity Provider, upon the request of the Primary Liquidity Provider, such amount or amounts as shall be sufficient (in the reasonable opinion of the Primary Liquidity Provider) to compensate it for any loss, cost or expense incurred by reason of the liquidation or redeployment of deposits or other funds acquired by the Primary Liquidity Provider to fund or maintain any LIBOR Advance (but excluding loss of the Applicable Margin or anticipated profits) incurred as a result of: 17 (1) Any repayment of a LIBOR Advance on a date other than the last day of the Interest Period for such Advance; or (2) Any failure by the Borrower to borrow a LIBOR Advance on the date for borrowing specified in the relevant notice under Section 2.02. Section 3.10. Illegality. Notwithstanding any other provision in this Agreement, if any change in any law, rule or regulation applicable to or binding on the Primary Liquidity Provider, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Primary Liquidity Provider with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for the Primary Liquidity Provider to maintain or fund its LIBOR Advances, then upon notice to the Borrower, the Policy Provider and Delta by the Primary Liquidity Provider, the outstanding principal amount of the LIBOR Advances shall be converted to Base Rate Advances (a) immediately upon demand of the Primary Liquidity Provider, if such change or compliance with such request, in the reasonable judgment of the Primary Liquidity Provider, requires immediate conversion; or (b) at the expiration of the last Interest Period to expire before the effective date of any such change or request. The Primary Liquidity Provider will notify the Borrower and Delta as promptly as practicable of any event that will lead to the conversion of LIBOR Advances to Base Rate Advances under this Section 3.10. The Primary Liquidity Provider agrees to investigate all commercially reasonable alternatives for avoiding the need for such conversion, including, without limitation, designating a different Lending Office, if such designation or other action would avoid the need to convert such LIBOR Advances to Base Rate Advances; provided that the foregoing shall not obligate the Primary Liquidity Provider to take any action that would, in its reasonable judgment, cause the Primary Liquidity Provider to incur any material loss or cost, unless the Borrower or Delta agrees to reimburse the Primary Liquidity Provider therefor. If no such designation or other action is effected, or, if effected, fails to avoid the need for conversion of the LIBOR Advances to Base Rate Advances, Delta may arrange for a Replacement Primary Liquidity Facility in accordance with Section 3.06(e) of the Intercreditor Agreement. ARTICLE IV CONDITIONS PRECEDENT Section 4.01. Conditions Precedent to Effectiveness of Section 2.01. Section 2.01 of this Agreement shall become effective on and as of the first date (the "EFFECTIVE DATE") on which the following conditions precedent have been satisfied (or waived by the appropriate party or parties): (a) The Primary Liquidity Provider shall have received on or before the Closing Date each of the following, and in the case of each document delivered pursuant to paragraphs (i), (ii) and (iii), each in form and substance satisfactory to the Primary Liquidity Provider: 18 (i) This Agreement and the Fee Letter duly executed on behalf of the Borrower and Delta, in the case of the Fee Letter; (ii) The Intercreditor Agreement duly executed on behalf of each of the parties thereto (other than the Primary Liquidity Provider); (iii) Fully executed copies of each of the Operative Agreements executed and delivered on or before the Closing Date (other than this Agreement and the Intercreditor Agreement); (iv) Specimen copies of the Class G Certificates; (v) An executed copy of each document, instrument, certificate and opinion delivered on or before the Closing Date pursuant to the Class G Trust Agreement, the Intercreditor Agreement and the other Operative Agreements (in the case of each such opinion, either addressed to the Primary Liquidity Provider or accompanied by a letter from the counsel rendering such opinion to the effect that the Primary Liquidity Provider is entitled to rely on such opinion as of its date as if it were addressed to the Primary Liquidity Provider); and (vi) An agreement from Delta, pursuant to which (x) Delta agrees to provide copies of quarterly financial statements and audited annual financial statements to the Primary Liquidity Provider (which Delta may provide in an electronic format by electronic mail or making such available over the internet) and (y) Delta agrees to allow the Primary Liquidity Provider to discuss the transactions contemplated by the Operative Agreements with officers and employees of Delta. (b) On and as of the Effective Date no event shall have occurred and be continuing, or would result from the entering into of this Agreement or the making of any Advance, which constitutes a Liquidity Event of Default. (c) The filings referred to in Sections 3.01(d) and 3.02(c) of the Participation Agreements shall have been filed (or shall be in the process of being filed). (d) The Primary Liquidity Provider shall have received payment in full of the fees and other sums required to be paid to or for the account of the Primary Liquidity Provider on or prior to the Effective Date pursuant to the Fee Letter. (e) All conditions precedent to the issuance of the Certificates under the Trust Agreements shall have been satisfied or waived and all conditions precedent to the purchase of (i) the Class G Certificates by the Initial Purchasers, (ii) the Class C Certificates by the Initial Class C Holder, and (iii) the Class D Certificates by the Initial Class D Holder, shall have been satisfied. (f) The Borrower and Delta shall have received a certificate, dated the Effective Date signed by a duly authorized representative of the Primary Liquidity 19 Provider, certifying that all conditions precedent specified in this Section 4.01 have been satisfied or waived by the Primary Liquidity Provider. Section 4.02. Conditions Precedent to Borrowing. The obligation of the Primary Liquidity Provider to make an Advance on the occasion of each Borrowing shall be subject to the conditions precedent that the Effective Date shall have occurred and, prior to the time of such Borrowing, the Borrower shall have delivered a Notice of Borrowing which conforms to the terms and conditions of this Agreement. ARTICLE V COVENANTS Section 5.01. Affirmative Covenants of the Borrower. So long as any Advance shall remain unpaid or the Primary Liquidity Provider shall have any Maximum Commitment hereunder or the Borrower shall have any obligation to pay any amount to the Primary Liquidity Provider hereunder, the Borrower will, unless the Primary Liquidity Provider shall otherwise consent in writing: (a) Performance of This and Other Agreements. Punctually pay or cause to be paid all amounts payable by it under this Agreement, the Intercreditor Agreement and the Fee Letter and observe and perform in all material respects the conditions, covenants and requirements applicable to it contained in this Agreement, the Intercreditor Agreement and the Fee Letter. (b) Reporting Requirements. Furnish to the Primary Liquidity Provider with reasonable promptness, such other information and data with respect to the transactions contemplated by the Operative Agreements as from time to time may be reasonably requested by the Primary Liquidity Provider; and permit the Primary Liquidity Provider, upon reasonable notice, to inspect the Borrower's books and records with respect to such transactions and to meet with officers and employees of the Borrower to discuss such transactions. (c) Certain Operative Agreements. Furnish to the Primary Liquidity Provider with reasonable promptness, copies of such Operative Agreements entered into after the date hereof as from time to time may be reasonably requested by the Primary Liquidity Provider. Section 5.02. Negative Covenants of the Borrower. Subject to the first and fourth paragraphs of Section 7.01(a) of the Intercreditor Agreement and Section 7.01(b) of the Intercreditor Agreement, so long as any Advance shall remain unpaid or the Primary Liquidity Provider shall have any Maximum Commitment hereunder or the Borrower shall have any obligation to pay any amount to the Primary Liquidity Provider hereunder, the Borrower will not appoint or permit or suffer to be appointed any successor Borrower without the prior written consent of the Primary Liquidity Provider, which consent shall not be unreasonably withheld or delayed. 20 ARTICLE VI LIQUIDITY EVENTS OF DEFAULT Section 6.01. Liquidity Events of Default. If (a) any Liquidity Event of Default has occurred and is continuing and (b) there is a Performing Note Deficiency, the Primary Liquidity Provider may, in its discretion, deliver to the Borrower and the Policy Provider a Termination Notice, the effect of which shall be to cause (i) this Agreement to expire at the close of business on the fifth Business Day after the date on which such Termination Notice is received by the Borrower and the Policy Provider, (ii) the Borrower to promptly request, and the Primary Liquidity Provider to promptly make, a Final Advance in accordance with Section 2.02(d) hereof and Section 3.06(i) of the Intercreditor Agreement, (iii) all other outstanding Advances to be automatically converted into Final Advances for purposes of determining the Applicable Liquidity Rate for interest payable thereon and (iv) subject to Sections 2.07 and 2.09, all Advances, any accrued interest thereon and any other amounts outstanding hereunder to become immediately due and payable to the Primary Liquidity Provider. ARTICLE VII MISCELLANEOUS Section 7.01. No Oral Modifications or Continuing Waivers. No terms or provisions of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Borrower and the Primary Liquidity Provider and any other Person whose consent is required pursuant to this Agreement; provided that no such change or other action relating to payment terms (including timing of any payments) shall affect the payment obligations of Delta without Delta's prior written consent and any such change or other action relating to payment terms (including timing of any payments) that would adversely affect the interests of the Policy Provider shall require the consent of the Policy Provider; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. Section 7.02. 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 Agreement 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: 21 If to the Borrower, to: U.S. BANK TRUST NATIONAL ASSOCIATION 225 Asylum Street, Goodwin Square Hartford, Connecticut 06103 Attention: Corporate Trust Division Telephone: (860) 244-1844 Telecopy: (860) 244-1881 If to the Primary Liquidity Provider, to: LANDESBANK BADEN-WURTTEMBERG Am Hauptbahnhof 2 D-70173 Stuttgart Germany Attention: Transportation Finance/Jeannine Eder Telephone: +49 711 124-9757 Telecopy: +49 711 124-9747 LANDESBANK BADEN-WURTTEMBERG, NEW YORK BRANCH 535 Madison Avenue 6th Floor New York, NY 10022 Attention: Claudia Rothe, Vice President Bette Smolen, Assistant Vice President Telephone: (212) 584-1700 Telecopy: (212) 584-1729 Any party, by notice to the other party hereto, may designate additional or different addresses for subsequent notices or communications. Whenever the words "notice" or "notify" or similar words are used herein, they mean the provision of formal notice as set forth in this Section 7.02. Section 7.03. No Waiver; Remedies. No failure on the part of the Primary Liquidity Provider to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right under this Agreement preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 7.04. Further Assurances. The Borrower agrees to do such further acts and things and to execute and deliver to the Primary Liquidity Provider such additional assignments, agreements, powers and instruments as the Primary Liquidity Provider may reasonably require or deem advisable to carry into effect the purposes of this Agreement and the other Operative 22 Agreements or to better assure and confirm unto the Primary Liquidity Provider its rights, powers and remedies hereunder and under the other Operative Agreements. Section 7.05. Indemnification; Survival of Certain Provisions. The Primary Liquidity Provider shall be indemnified hereunder to the extent and in the manner described in Section 4.02 of the Participation Agreements. In addition, the Borrower agrees to indemnify, protect, defend and hold harmless each Liquidity Indemnitee from and against all Expenses of any kind or nature whatsoever (other than any Expenses of the nature described in Sections 3.01 or 7.07 or in the Fee Letter (regardless of whether indemnified against pursuant to said Sections or in such Fee Letter)), that may be imposed on or incurred by such Liquidity Indemnitee, in any way relating to, resulting from, or arising out of or in connection with, any action, suit or proceeding by any third party against such Liquidity Indemnitee and relating to this Agreement, the Fee Letter, the Intercreditor Agreement or any Participation Agreement; provided, however, that the Borrower shall not be required to indemnify, protect, defend and hold harmless any Liquidity Indemnitee in respect of any Expense of such Liquidity Indemnitee to the extent such Expense is (i) attributable to the negligence or willful misconduct of such Liquidity Indemnitee or any other Liquidity Indemnitee, (ii) an ordinary and usual operating overhead expense, (iii) attributable to the failure by such Liquidity Indemnitee or any other Liquidity Indemnitee to perform or observe any agreement, covenant or condition on its part to be performed or observed in this Agreement, the Intercreditor Agreement, the Fee Letter or any other Operative Agreement to which it is a party or (iv) otherwise excluded from the indemnification provisions contained in Section 4.02 of the Participation Agreements. The provisions of Sections 3.01, 3.03, 3.09, 7.05 and 7.07 and the indemnities contained in Section 4.02 of the Participation Agreements shall survive the termination of this Agreement. Section 7.06. Liability of the Primary Liquidity Provider. (a) Neither the Primary Liquidity Provider nor any of its officers, employees or directors shall be liable or responsible for: (i) the use which may be made of the Advances or any acts or omissions of the Borrower or any beneficiary or transferee in connection therewith; (ii) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; or (iii) the making of Advances by the Primary Liquidity Provider against delivery of a Notice of Borrowing and other documents which do not comply with the terms hereof; provided, however, that the Borrower shall have a claim against the Primary Liquidity Provider, and the Primary Liquidity Provider shall be liable to the Borrower, to the extent of any damages suffered by the Borrower that were the result of (A) the Primary Liquidity Provider's willful misconduct or gross negligence in determining whether documents presented hereunder comply with the terms hereof or (B) any breach by the Primary Liquidity Provider of any of the terms of this Agreement or the Intercreditor Agreement, including, but not limited to, the Primary Liquidity Provider's failure to make lawful payment hereunder after the delivery to it by the Borrower of a Notice of Borrowing complying with the terms and conditions hereof. (b) Neither the Primary Liquidity Provider nor any of its officers, employees or directors or affiliates shall be liable or responsible in any respect for (i) any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with this Agreement or any Notice of Borrowing delivered hereunder or (ii) any action, inaction or omission which may be taken by it in good faith, absent willful 23 misconduct or negligence (in which event the extent of the Primary Liquidity Provider's potential liability to the Borrower shall be limited as set forth in the immediately preceding paragraph), in connection with this Agreement or any Notice of Borrowing. Section 7.07. Certain Costs and Expenses. The Borrower agrees promptly to pay, or cause to be paid, (a) the reasonable fees, expenses and disbursements of Milbank, Tweed, Hadley & McCloy LLP, special counsel for the Primary Liquidity Provider, in connection with the preparation, negotiation, execution, delivery, filing and recording of the Operative Agreements, any waiver or consent thereunder or any amendment thereof and (b) if a Liquidity Event of Default occurs, all out-of-pocket expenses incurred by the Primary Liquidity Provider, including reasonable fees and disbursements of counsel, in connection with such Liquidity Event of Default and any collection, bankruptcy, insolvency and other enforcement proceedings in connection therewith. In addition, the Borrower shall pay any and all recording, stamp and other similar taxes and fees payable or determined to be payable in the United States in connection with the execution, delivery, filing and recording of this Agreement, any other Operative Agreement and such other documents, and agrees to save the Primary Liquidity Provider harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes or fees. Section 7.08. Binding Effect; Participations. (a) This Agreement shall be binding upon and inure to the benefit of the Borrower and the Primary Liquidity Provider and their respective successors and permitted assigns, except that neither the Primary Liquidity Provider (except as otherwise provided in this Section 7.08) nor (except as contemplated by Section 3.08) the Borrower shall have the right to assign, pledge or otherwise transfer its rights or obligations hereunder or any interest herein, subject to the Primary Liquidity Provider's right to grant Participations pursuant to Section 7.08(b). (b) The Primary Liquidity Provider agrees that it will not grant any participation (including, without limitation, a "RISK PARTICIPATION") (any such participation, a "PARTICIPATION") in or to all or a portion of its rights and obligations hereunder or under the other Operative Agreements, unless all of the following conditions are satisfied: (i) such Participation is to a Permitted Transferee, (ii) such Participation is made in accordance with all applicable laws, including, without limitation, the Securities Act of 1933, as amended, the Trust Indenture Act of 1939, as amended, and any other applicable laws relating to the transfer of similar interests and (iii) such Participation shall not be made under circumstances that require registration under the Securities Act of 1933, as amended, or qualification of any indenture under the Trust Indenture Act of 1939, as amended. Notwithstanding any such Participation, the Primary Liquidity Provider agrees that (1) the Primary Liquidity Provider's obligations under the Operative Agreements shall remain unchanged, and such participant shall have no rights or benefits as against Delta or the Borrower or under any Operative Agreement, (2) the Primary Liquidity Provider shall remain solely responsible to the other parties to the Operative Agreements for the performance of such obligations, (3) the Primary Liquidity Provider shall remain the maker of any Advances, and the other parties to the Operative Agreements shall continue to deal solely and directly with the Primary Liquidity Provider in connection with the Advances and the Primary Liquidity Provider's rights and obligations under the Operative Agreements, (4) the Primary Liquidity Provider shall be solely responsible for any withholding Taxes or any filing or reporting requirements relating to such Participation and shall hold the Borrower and Delta and 24 their respective successors, permitted assigns, affiliates, agents and servants harmless against the same and (5) neither Delta nor the Borrower shall be required to pay to the Primary Liquidity Provider any amount under Section 3.01 or Section 3.03 greater than it would have been required to pay had there not been any grant of a Participation by the Primary Liquidity Provider. The Primary Liquidity Provider may, in connection with any Participation or proposed Participation pursuant to this Section 7.08(b), disclose to the participant or proposed participant any information relating to the Operative Agreements or to the parties thereto furnished to the Primary Liquidity Provider thereunder or in connection therewith and permitted to be disclosed by the Primary Liquidity Provider; provided, however, that prior to any such disclosure, the participant or proposed participant shall agree in writing for the express benefit of the Borrower and Delta to preserve the confidentiality of any confidential information included therein (subject to customary exceptions). (c) Notwithstanding the other provisions of this Section 7.08, the Primary Liquidity Provider may assign and pledge all or any portion of the Advances owing to it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned Advances made by the Borrower to the Primary Liquidity Provider in accordance with the terms of this Agreement shall satisfy the Borrower's obligations hereunder in respect of such assigned Advance to the extent of such payment. No such assignment shall release the Primary Liquidity Provider from its obligations hereunder. Section 7.09. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 7.10. Governing Law. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver of Immunity. (a) Each of the parties hereto, to the extent it may do so under applicable law, for purposes hereof hereby (i) irrevocably submits itself to the non-exclusive jurisdiction of the courts of the State of New York sitting in the City of New York and to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto or thereto, or their successors or permitted assigns and (ii) 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 25 that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by such courts. (b) THE BORROWER AND THE PRIMARY LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims and all other common law and statutory claims. The Borrower and the Primary Liquidity Provider each warrant and represent that it has reviewed this waiver with its legal counsel, and that it knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. (c) The Primary Liquidity Provider hereby waives any immunity it may have from the jurisdiction of the courts of the United States or of any state thereof and waives any immunity any of its properties located in the United States may have from attachment or execution upon a judgment entered by any such court under the United States Foreign Sovereign Immunities Act of 1976 or any similar successor legislation. Section 7.12. Counterparts. This Agreement may be executed in any number of counterparts (and each party shall not be required to execute the same counterpart). Each counterpart of this Agreement including a signature page or pages executed by each of the parties hereto shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Section 7.13. Entirety. This Agreement and the Intercreditor Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and supersede all prior understandings and agreements of such parties. Section 7.14. 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 7.15. Primary Liquidity Provider's Obligation to Make Advances. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE PRIMARY LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL BE ABSOLUTE, UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT. 26 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first set forth above. U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as Subordination Agent, as agent and trustee for the Class G Trust, as Borrower By: ----------------------------------------- Name: Title: LANDESBANK BADEN-WURTTEMBERG, as Primary Liquidity Provider By: ----------------------------------------- Name: Title: By: ----------------------------------------- Name: Title: 27 ANNEX I to REVOLVING CREDIT AGREEMENT INTEREST ADVANCE NOTICE OF BORROWING The undersigned, a duly authorized signatory of the undersigned borrower (the "BORROWER"), hereby certifies to Landesbank Baden-Wurttemberg (the "PRIMARY LIQUIDITY PROVIDER"), with reference to the Revolving Credit Agreement (2003-1G), dated as of January 30, 2003, between the Borrower and the Primary Liquidity Provider (the "LIQUIDITY AGREEMENT"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that: (1) The Borrower is the Subordination Agent under the Intercreditor Agreement. (2) The Borrower is delivering this Notice of Borrowing for the making of an Interest Advance by the Primary Liquidity Provider to be used for the payment of the interest on the Class G Certificates which is payable on ____________, ____ (the "DISTRIBUTION DATE") in accordance with the terms and provisions of the Class G Trust Agreement and the Class G Certificates, which Advance is requested to be made on ____________, ____. The Interest Advance should be remitted to [insert wire and account details]. (3) The amount of the Interest Advance requested hereby (i) is $_______________.__, to be applied in respect of the payment of the interest which is due and payable on the Class G Certificates on the Distribution Date, (ii) does not include any amount with respect to the payment of principal of, or Break Amount (if any), or Make-Whole Amount (if any) on, the Class G Certificates, the Class C Certificates, the Class D Certificates, or interest on the Class C Certificates, or the Class D Certificates (iii) was computed in accordance with the provisions of the Class G Certificates and the Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I), (iv) does not exceed the Maximum Available Commitment on the date hereof, (v) takes into account any amounts received in respect of any Series G Equipment Note with respect of which a Policy Provider Election has been made and (vi) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing. (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a) the Borrower will apply the same in accordance with the terms of Section 3.06(b) of the Intercreditor Agreement, (b) no portion of such amount shall be applied by the Borrower for any other purpose and (c) no portion of such amount until so applied shall be commingled with other funds held by the Borrower. The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, the making of the Interest Advance as requested by this Notice of Borrowing shall automatically reduce, subject to reinstatement in accordance with the terms of the Liquidity Agreement, the Maximum Available Commitment by an amount equal to the amount of the Interest Advance requested to be made hereby as set forth in clause (i) of paragraph (3) of this Notice of Borrowing and such reduction shall automatically result in corresponding reductions in the amounts available to be borrowed pursuant to a subsequent Advance. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the ____ day of _________, ____. U.S. BANK TRUST NATIONAL ASSOCIATION, as Subordination Agent, as Borrower By: ----------------------------------------- Name: Title: SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING [Insert Copy of Computations in accordance with Interest Advance Notice of Borrowing] ANNEX II to REVOLVING CREDIT AGREEMENT DOWNGRADE ADVANCE NOTICE OF BORROWING The undersigned, a duly authorized signatory of the undersigned borrower (the "BORROWER"), hereby certifies to Landesbank Baden-Wurttemberg (the "PRIMARY LIQUIDITY PROVIDER"), with reference to the Revolving Credit Agreement (2003-1G), dated as of January 30, 2003, between the Borrower and the Primary Liquidity Provider (the "LIQUIDITY AGREEMENT"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that: (1) The Borrower is the Subordination Agent under the Intercreditor Agreement. (2) The Borrower is delivering this Notice of Borrowing for the making of the Downgrade Advance by the Primary Liquidity Provider to be used for the funding of the Primary Cash Collateral Account in accordance with Section 3.06(c) of the Intercreditor Agreement, which Advance is requested to be made on __________, ____. The Downgrade Advance should be remitted to [insert wire and account details]. (3) The amount of the Downgrade Advance requested hereby (i) is $_______________.__, which equals the Maximum Available Commitment on the date hereof and is to be applied in respect of the funding of the Primary Cash Collateral Account in accordance with Sections 3.06(c) and 3.06(f) of the Intercreditor Agreement, (ii) does not include any amount with respect to the payment of the principal of, or Break Amount (if any) or Make-Whole Amount (if any) on, the Class G Certificates, or principal of, or interest or Break Amount (if any) or Make-Whole Amount (if any) on, the Class C Certificates, or the Class D Certificates, (iii) was computed in accordance with the provisions of the Class G Certificates, the Class G Trust Agreement and the Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I) and (iv) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing under the Liquidity Agreement. (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a) the Borrower will deposit such amount in the Primary Cash Collateral Account and apply the same in accordance with the terms of Sections 3.06(c) and 3.06(f) of the Intercreditor Agreement, (b) no portion of such amount shall be applied by the Borrower for any other purpose and (c) no portion of such amount until so applied shall be commingled with other funds held by the Borrower. The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, (A) the making of the Downgrade Advance as requested by this Notice of Borrowing shall automatically and irrevocably terminate the obligation of the Primary Liquidity Provider to make further Advances under the Liquidity Agreement and (B) following the making by the Primary Liquidity Provider of the Downgrade Advance requested by this Notice of Borrowing, the Borrower shall not be entitled to request any further Advances under the Liquidity Agreement. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the ____ day of _________, ____. U.S. BANK TRUST NATIONAL ASSOCIATION, as Subordination Agent, as Borrower By: ----------------------------------------- Name: Title: SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING [Insert Copy of computations in accordance with Downgrade Advance Notice of Borrowing] ANNEX III to REVOLVING CREDIT AGREEMENT FINAL ADVANCE NOTICE OF BORROWING The undersigned, a duly authorized signatory of the undersigned borrower (the "BORROWER"), hereby certifies to Landesbank Baden-Wurttemberg (the "PRIMARY LIQUIDITY PROVIDER"), with reference to the Revolving Credit Agreement (2003-1G), dated as of January 30, 2003, between the Borrower and the Primary Liquidity Provider (the "LIQUIDITY AGREEMENT"; the terms defined therein and not otherwise defined herein being used herein as therein defined or referenced), that: (1) The Borrower is the Subordination Agent under the Intercreditor Agreement. (2) The Borrower is delivering this Notice of Borrowing for the making of the Final Advance by the Primary Liquidity Provider to be used for the funding of the Primary Cash Collateral Account in accordance with Section 3.06(i) of the Intercreditor Agreement by reason of the receipt by the Borrower of a Termination Notice from the Primary Liquidity Provider with respect to the Liquidity Agreement, which Advance is requested to be made on ____________, ____. The Final Advance should be remitted to [insert wire and account details]. (3) The amount of the Final Advance requested hereby (i) is $_________________.__, which equals the Maximum Available Commitment on the date hereof and is to be applied in respect of the funding of the Primary Cash Collateral Account in accordance with Sections 3.06(f) and 3.06(i) of the Intercreditor Agreement, (ii) does not include any amount with respect to the payment of principal of, or Break Amount (if any) or Make-Whole Amount (if any) on, the Class G Certificates, or principal of, or interest or Break Amount (if any) or Make-Whole Amount (if any) on, the Class C Certificates or the Class D Certificates, (iii) was computed in accordance with the provisions of the Class G Certificates, the Class G Trust Agreement and the Intercreditor Agreement (a copy of which computation is attached hereto as Schedule I) and (iv) has not been and is not the subject of a prior or contemporaneous Notice of Borrowing. (4) Upon receipt by or on behalf of the Borrower of the amount requested hereby, (a) the Borrower will deposit such amount in the Primary Cash Collateral Account and apply the same in accordance with the terms of Sections 3.06(f) and 3.06(i) of the Intercreditor Agreement, (b) no portion of such amount shall be applied by the Borrower for any other purpose and (c) no portion of such amount until so applied shall be commingled with other funds held by the Borrower. The Borrower hereby acknowledges that, pursuant to the Liquidity Agreement, (A) the making of the Final Advance as requested by this Notice of Borrowing shall automatically and irrevocably terminate the obligation of the Primary Liquidity Provider to make further Advances under the Liquidity Agreement and (B) following the making by the Primary Liquidity Provider of the Final Advance requested by this Notice of Borrowing, the Borrower shall not be entitled to request any further Advances under the Liquidity Agreement. IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Borrowing as of the ____ day of _________, ____. U.S. BANK TRUST NATIONAL ASSOCIATION, as Subordination Agent, as Borrower By: ----------------------------------------- Name: Title: SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING [Insert Copy of Computations in accordance with Final Advance Notice of Borrowing] ANNEX IV to REVOLVING CREDIT AGREEMENT NOTICE OF TERMINATION [Date] U.S. Bank National Association, as Subordination Agent, as Borrower 225 Asylum Street Goodwin Square Hartford, Connecticut 06103 Attention: Corporate Trust Division Ambac Assurance Corporation, as Policy Provider One State Street Plaza New York, New York, 10004 Attention: [ ] Re: Revolving Credit Agreement, dated as of January 30, 2003, between U.S. Bank Trust National Association, as Subordination Agent, as agent and trustee for the Delta Air Lines Pass Through Trust 2003-1G, as Borrower, and Landesbank Baden-Wurttemberg (the "LIQUIDITY AGREEMENT") Ladies and Gentlemen: You are hereby notified that pursuant to Section 6.01 of the Liquidity Agreement, by reason of the occurrence and continuance of a Liquidity Event of Default and the existence of a Performing Note Deficiency (each as defined therein), we are giving this notice to you in order to cause (i) our obligations to make Advances (as defined therein) under such Liquidity Agreement to terminate at the close of business on the fifth Business Day after the date on which you receive this notice and (ii) you to request a Final Advance under the Liquidity Agreement pursuant to Section 3.06(i) of the Intercreditor Agreement (as defined in the Liquidity Agreement) as a consequence of your receipt of this notice. THIS NOTICE IS THE "NOTICE OF TERMINATION" PROVIDED FOR UNDER THE LIQUIDITY AGREEMENT. OUR OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY AGREEMENT WILL TERMINATE AT THE CLOSE OF BUSINESS ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU RECEIVE THIS NOTICE. Very truly yours, LANDESBANK BADEN-WURTTEMBERG, as Primary Liquidity Provider By: ----------------------------------------- Name: Title: cc: U.S. Bank Trust National Association, as Class G Trustee ANNEX V to REVOLVING CREDIT AGREEMENT NOTICE OF REPLACEMENT SUBORDINATION AGENT [Date] Attention: Re: Revolving Credit Agreement, dated as of January 30, 2003, between U.S. Bank Trust National Association, as Subordination Agent, as agent and trustee for the Delta Air Lines Pass Through Trust 2003-1G, as Borrower, and Landesbank Baden-Wurttemberg (the "LIQUIDITY AGREEMENT") Ladies and Gentlemen: For value received, the undersigned beneficiary hereby irrevocably transfers to: [Name of Transferee] [Address of Transferee] all rights and obligations of the undersigned as Borrower under the Liquidity Agreement referred to above. The transferee has succeeded the undersigned as Subordination Agent under the Intercreditor Agreement referred to in the first paragraph of the Liquidity Agreement, pursuant to the terms of Section 7.01 of the Intercreditor Agreement. By this transfer, all rights of the undersigned as Borrower under the Liquidity Agreement are transferred to the transferee and the transferee shall hereafter have the sole rights and obligations as Borrower thereunder. The undersigned shall pay any costs and expenses of such transfer, including, but not limited to, transfer taxes or governmental charges. This transfer shall be effective as of [specify time and date]. U.S. BANK TRUST NATIONAL ASSOCIATION, as Subordination Agent, as Borrower By: ----------------------------------------- Name: Title: EX-4.6 7 g83137exv4w6.txt ABOVE-CAP LIQUIDITY FACILITY EXHIBIT 4.6 (MULTICURRENCY -- CROSS BORDER) ISDA(R) International Swap Dealers Association, Inc. MASTER AGREEMENT dated as of January 30, 2003 between Merrill Lynch Capital Services, Inc. and U.S. Bank Trust National Association have entered and/or anticipate entering into one or more transactions (each a "Transaction") that are or will be governed by this Master Agreement, which includes the schedule (the "Schedule"), and the documents and other confirming evidence (each a "Confirmation") exchanged between the parties confirming those Transactions. Accordingly, the parties agree as follows: -- 1. INTERPRETATION. (a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement. (b) INCONSISTENCY. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will prevail for the purpose of the relevant Transaction. (c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this "Agreement"), and the parties would not otherwise enter into any Transactions. Copyright(C)1992 by International Swap Dealers Association, Inc. 2. OBLIGATIONS. (a) GENERAL CONDITIONS. (i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement. (ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement. (iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement. (b) CHANGE OF ACCOUNT. Either party may change its account for receiving a payment or delivery by giving notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery to which such change applies unless such other party gives timely notice of a reasonable objection to such change. (c) NETTING. If on any date amounts would otherwise be payable:-- (i) in the same currency; and (ii) in respect of the same Transaction, by each party to the other, then, on such date, each party's obligation to make payment of any such amount will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable by one party exceeds the aggregate amount that would otherwise have been payable by the other party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable to pay to the other party the excess of the larger aggregate amount over the smaller aggregate amount. The parties may elect in respect of two or more Transactions that a net amount will be determined in respect of all amounts payable on the same date in the same currency in respect of such Transactions, regardless of whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as being subject to the election, together with the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such Transactions from such date). This election may be made separately for different groups of Transactions and will apply separately to each pairing of Offices through which the parties make and receive payments or deliveries. ISDA(R) 1992 2 (d) DEDUCTION OR WITHHOLDING FOR TAX. (i) GROSS-UP. All payments under this Agreement will be made without any deduction or withholding for or on account of any Tax unless such deduction or withholding is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, then in effect. If a party is so required to deduct or withhold, then that party ("X") will:-- (1) promptly notify the other party ("Y") of such requirement; (2) pay to the relevant authorities the full amount required to be deducted or withheld (including the full amount required to be deducted or withheld from any additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier of determining that such deduction or withholding is required or receiving notice that such amount has been assessed against Y; (3) promptly forward to Y an official receipt (or a certified copy), or other documentation reasonably acceptable to Y, evidencing such payment to such authorities; and (4) if such Tax is an indemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwise entitled under this Agreement, such additional amount as is necessary to ensure that the net amount actually received by Y (free and clear of Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y would have received had no such deduction or withholding been required. However, X will not be required to pay any additional amount to Y to the extent that it would not be required to be paid but for:-- (A) the failure by Y to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d); or (B) the failure of a representation made by Y pursuant to Section 3(f) to be accurate and true unless such failure would not have occurred but for (I) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (II) a Change in Tax Law. (ii) LIABILITY. If:-- (1) X is required by any applicable law, as modified by the practice of any relevant governmental revenue authority, to make any deduction or withholding in respect of which X would not be required to pay an additional amount to Y under Section 2(d)(i)(4); (2) X does not so deduct or withhold; and (3) a liability resulting from such Tax is assessed directly against X, then, except to the extent Y has satisfied or then satisfies the liability resulting from such Tax, Y will promptly pay to X the amount of such liability (including any related liability ISDA(R) 1992 3 for interest, but including any related liability for penalties only if Y has failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)). (e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before as well as after judgment) on the overdue amount to the other party on demand in the same currency as such overdue amount, for the period from (and including) the original due date for payment to (but excluding) the date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. If, prior to the occurrence or effective designation of an Early Termination Date in respect of the relevant Transaction, a party defaults in the performance of any obligation required to be settled by delivery, it will compensate the other party on demand if and to the extent provided for in the relevant Confirmation or elsewhere in this Agreement. 3. REPRESENTATIONS Each party represents to the other party (which representations will be deemed to be repeated by each party on each date on which a Transaction is entered into and, in the case of the representations in Section 3(f), at all times until the termination of this Agreement) that:-- (a) BASIC REPRESENTATIONS. (i) STATUS. It is duly organised and validly existing under the laws of the jurisdiction of its organisation or incorporation and, if relevant under such laws, in good standing; (ii) POWERS. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorise such execution, delivery and performance; (iii) NO VIOLATION OR CONFLICT. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets; (iv) CONSENTS. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and (v) OBLIGATIONS BINDING. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting creditors' rights ISDA(R) 1992 4 generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). (b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party. (c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document. (d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect. (e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(e) is accurate and true. (f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule as being made by it for the purpose of this Section 3(f) is accurate and true. 4. AGREEMENTS Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:-- (a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or, in certain cases under subparagraph (iii) below, to such government or taxing authority as the other party reasonably directs:-- (i) any forms, documents or certificates relating to taxation specified in the Schedule or any Confirmation; (ii) any other documents specified in the Schedule or any Confirmation; and (iii) upon reasonable demand by such other party, any form or document that may be required or reasonably requested in writing in order to allow such other party or its Credit Support Provider to make a payment under this Agreement or any applicable Credit Support Document without any deduction or withholding for or on account of any Tax or with such deduction or withholding at a reduced rate (so long as the completion, execution or submission of such form or document would not materially prejudice the legal or commercial position of the party in receipt of such demand), with any such form or document to be accurate and completed in a manner reasonably satisfactory to such ISDA(R) 1992 5 other party and to be executed and to be delivered with any reasonably required certification, in each case by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable. (b) MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future. (c) COMPLY WITH LAWS. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party. (d) TAX AGREEMENT. It will give notice of any failure of a representation made by it under Section 3(f) to be accurate and true promptly upon learning of such failure. (e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, organised, managed and controlled, or considered to have its seat, or in which a branch or office through which it is acting for the purpose of this Agreement is located ("Stamp Tax Jurisdiction") and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party's execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party. 5. EVENTS OF DEFAULT AND TERMINATION EVENTS (a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any of the following events constitutes an event of default (an "Event of Default") with respect to such party:-- (i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such failure is not remedied on or before the third Local Business Day after notice of such failure is given to the party; (ii) BREACH OF AGREEMENT. Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied on or before the thirtieth day after notice of such failure is given to the party; ISDA(R) 1992 6 (iii) CREDIT SUPPORT DEFAULT. (1) Failure by the party or any Credit Support Provider of such party to comply with or perform any agreement or obligation to be complied with or performed by it in accordance with any Credit Support Document if such failure is continuing after any applicable grace period has elapsed; (2) the expiration or termination of such Credit Support Document or the failing or ceasing of such Credit Support Document to be in full force and effect for the purpose of this Agreement (in either case other than in accordance with its terms) prior to the satisfaction of all obligations of such party under each Transaction to which such Credit Support Document relates without the written consent of the other party; or (3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, such Credit Support Document; (iv) MISREPRESENTATION. A representation (other than a representation under Section 3(e) or (f)) made or repeated or deemed to have been made or repeated by the party or any Credit Support Provider of such party in this Agreement or any Credit Support Document proves to have been incorrect or misleading in any material respect when made or repeated or deemed to have been made or repeated; (v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party (1) defaults under a Specified Transaction and, after giving effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice requirement or grace period, in making any payment or delivery due on the last payment, delivery or exchange date of, or any payment on early termination of, a Specified Transaction (or such default continues for at least three Local Business Days if there is no applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf); (vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar condition or event (however described) in respect of such party, any Credit Support Provider of such party or any applicable Specified Entity of such party under one or more agreements or instruments relating to Specified Indebtedness of any of them (individually or collectively) in an aggregate amount of not less than the applicable Threshold Amount (as specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable or (2) a default by such party, such Credit Support Provider or such Specified Entity (individually or collectively) in making one or more payments on the due date thereof in an aggregate amount of not less than the applicable Threshold Amount under such ISDA(R) 1992 7 agreements or instruments (after giving effect to any applicable notice requirement or grace period); (vii) BANKRUPTCY. The party, any Credit Support Provider of such party or any applicable Specified Entity of such party: -- (1) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (3) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (B) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (5) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets; (7) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (8) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive); or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or (viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support Provider of such party consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and, at the time of such consolidation, amalgamation, merger or transfer:-- (1) the resulting, surviving or transferee entity fails to assume all the obligations of such party or such Credit Support Provider under this Agreement or any Credit Support Document to which it or its predecessor was a party by operation of law or pursuant to an agreement reasonably satisfactory to the other party to this Agreement; or (2) the benefits of any Credit Support Document fail to extend (without the consent of the other party) to the performance by such resulting, surviving or transferee entity of its obligations under this Agreement. ISDA(R) 1992 8 (b) TERMINATION EVENTS. The occurrence at any time with respect to a party or, if applicable, any Credit Support Provider of such party or any Specified Entity of such party of any event specified below constitutes an Illegality if the event is specified in (i) below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon Merger if the event is specified in (iii) below, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to (iv) below or an Additional Termination Event if the event is specified pursuant to (v) below:-- (i) ILLEGALITY. Due to the adoption of, or any change in, any applicable law after the date on which a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such date, it becomes unlawful (other than as a result of a breach by the party of Section 4(b)) for such party (which will be the Affected Party): -- (1) to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of such Transaction or to comply with any other material provision of this Agreement relating to such Transaction; or (2) to perform, or for any Credit Support Provider of such party to perform, any contingent or other obligation which the party (or such Credit Support Provider) has under any Credit Support Document relating to such Transaction; (ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or brought in a court of competent jurisdiction, on or after the date on which a Transaction is entered into (regardless of whether such action is taken or brought with respect to a party to this Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or there is a substantial likelihood that it will, on the next succeeding Scheduled Payment Date (1) be required to pay to the other party an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is required to be deducted or withheld for or on account of a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect of such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B)); (iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the next succeeding Scheduled Payment Date will either (1) be required to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been deducted or withheld for or on account of any Indemnifiable Tax in respect of which the other party is not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a party consolidating or amalgamating with, or merging with or into, or transferring all or substantially all its assets to, another entity (which will be the Affected Party) where such action does not constitute an event described in Section 5(a)(viii); ISDA(R) 1992 9 (iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is specified in the Schedule as applying to the party, such party ("X"), any Credit Support Provider of X or any applicable Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets to, another entity and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of the resulting, surviving or transferee entity is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be, immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); or (v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination Event" is specified in the Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the Schedule or such Confirmation). (c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which would otherwise constitute or give rise to an Event of Default also constitutes an Illegality, it will be treated as an Illegality and will not constitute an Event of Default. 6. EARLY TERMINATION (a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event of Default with respect to a party (the "Defaulting Party") has occurred and is then continuing, the other party (the "Non-defaulting Party") may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions. If, however, "Automatic Early Termination" is specified in the Schedule as applying to a party, then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8). (b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT. (i) NOTICE. If a Termination Event occurs, an Affected Party will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Termination Event and each Affected Transaction and will also give such other information about that Termination Event as the other party may reasonably require. (ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, excluding immaterial, incidental expenses) to transfer within 20 days after it gives ISDA(R) 1992 10 notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist. If the Affected Party is not able to make such a transfer it will give notice to the other party to that effect within such 20 day period, whereupon the other party may effect such a transfer within 30 days after the notice is given under Section 6(b)(i). Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional upon the prior written consent of the other party, which consent will not be withheld if such other party's policies in effect at such time would permit it to enter into transactions with the transferee on the terms proposed. (iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties, each party will use all reasonable efforts to reach agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to avoid that Termination Event. (iv) RIGHT TO TERMINATE. If:-- (1) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as the case may be, has not been effected with respect to all Affected Transactions within 30 days after an Affected Party gives notice under Section 6(b)(i); or (2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the Affected Party, either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if there is more than one Affected Party, or the party which is not the Affected Party in the case of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Party may, by not more than 20 days notice to the other party and provided that the relevant Termination Event is then continuing, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all Affected Transactions. (c) EFFECT OF DESIGNATION. (i) If notice designating an Early Termination Date is given under Section 6(a) or (b), the Early Termination Date will occur on the date so designated, whether or not the relevant Event of Default or Termination Event is then continuing. (ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated Transactions will be required to be made, but without prejudice to the other provisions of this Agreement. The amount, if any, payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e). ISDA(R) 1992 11 (d) CALCULATIONS. (i) STATEMENT. On or as soon as reasonably practicable following the occurrence of an Early Termination Date, each party will make the calculations on its part, if any, contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations (including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving details of the relevant account to which any amount payable to it is to be paid. In the absence of written confirmation from the source of a quotation obtained in determining a Market Quotation, the records of the party obtaining such quotation will be conclusive evidence of the existence and accuracy of such quotation. (ii) PAYMENT DATE. An amount calculated as being due in respect of any Early Termination Date under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on the day which is two Local Business Days after the day on which notice of the amount payable is effective (in the case of an Early Termination Date which is designated as a result of a Termination Event). Such amount will be paid together with (to the extent permitted under applicable law) interest thereon (before as well as after judgment) in the Termination Currency, from (and including) the relevant Early Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated on the basis of daily compounding and the actual number of days elapsed. (e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the following provisions shall apply based on the parties' election in the Schedule of a payment measure, either "Market Quotation" or "Loss", and a payment method, either the "First Method" or the "Second Method". If the parties fail to designate a payment measure or payment method in the Schedule, it will be deemed that "Market Quotation" or the "Second Method", as the case may be, shall apply. The amount, if any, payable in respect of an Early Termination Date and determined pursuant to this Section will be subject to any Set-off. (i) EVENTS OF DEFAULT. If the Early Termination Date results from an Event of Default:-- (1) First Method and Market Quotation. If the First Method and Market Quotation apply, the Defaulting Party will pay to the Non-defaulting Party the excess, if a positive number, of (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party over (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. (2) First Method and Loss. If the First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting Party, if a positive number, the Non-defaulting Party's Loss in respect of this Agreement. ISDA(R) 1992 12 (3) Second Method and Market Quotation. If the Second Method and Market Quotation apply, an amount will be payable equal to (A) the sum of the Settlement Amount (determined by the Non-defaulting Party) in respect of the Terminated Transactions and the Termination Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party. (4) Second Method and Loss. If the Second Method and Loss apply, an amount will be payable equal to the Non-defaulting Party's Loss in respect of this Agreement. If that amount is a positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party. (ii) TERMINATION EVENTS. If the Early Termination Date results from a Termination Event:-- (1) One Affected Party. If there is one Affected Party, the amount payable will be determined in accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the Defaulting Party and to the Non-defaulting Party will be deemed to be references to the Affected Party and the party which is not the Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being terminated, Loss shall be calculated in respect of all Terminated Transactions. (2) Two Affected Parties. If there are two Affected Parties:-- (A) if Market Quotation applies, each party will determine a Settlement Amount in respect of the Terminated Transactions, and an amount will be payable equal to (I) the sum of (a) one-half of the difference between the Settlement Amount of the party with the higher Settlement Amount ("X") and the Settlement Amount of the party with the lower Settlement Amount ("Y") and (b) the Termination Currency Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency Equivalent of the Unpaid Amounts owing to Y; and (B) if Loss applies, each party will determine its Loss in respect of this Agreement (or, if fewer than all the Transactions are being terminated, in respect of all Terminated Transactions) and an amount will be payable equal to one-half of the difference between the Loss of the party with the higher Loss ("X") and the Loss of the party with the lower Loss ("Y"). If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will pay the absolute value of that amount to Y. (iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early Termination Date occurs because "Automatic Early Termination" applies in respect of a party, the amount ISDA(R) 1992 13 determined under this Section 6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments or deliveries made by one party to the other under this Agreement (and retained by such other party) during the period from the relevant Early Termination Date to the date for payment determined under Section 6(d)(ii). (iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies an amount recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount is payable for the loss of bargain and the loss of protection against future risks and except as otherwise provided in this Agreement neither party will be entitled to recover any additional damages as a consequence of such losses. 7. TRANSFER Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that: -- (a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and (b) a party may make such a transfer of all or any part of its interest in any amount payable to it from a Defaulting Party under Section 6(e). Any purported transfer that is not in compliance with this Section will be void. 8. CONTRACTUAL CURRENCY (a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the "Contractual Currency"). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in a reasonable manner and in good faith in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess. (b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to ISDA(R) 1992 14 any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually received by such party. The term "rate of exchange" includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of or conversion into the Contractual Currency. (c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these indemnities constitute separate and independent obligations from the other obligations in this Agreement, will be enforceable as separate and independent causes of action, will apply notwithstanding any indulgence granted by the party to which any payment is owed and will not be affected by judgment being obtained or claim or proof being made for any other sums payable in respect of this Agreement. (d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be sufficient for a party to demonstrate that it would have suffered a loss had an actual exchange or purchase been made. 9. MISCELLANEOUS (a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto. (b) AMENDMENTS. No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an electronic messaging system. (c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties under this Agreement will survive the termination of any Transaction. (d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law. ISDA(R) 1992 15 (e) COUNTERPARTS AND CONFIRMATIONS. (i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original. (ii) The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon as practicable and may be executed and delivered in counterparts (including by facsimile transmission) or be created by an exchange of telexes or by an exchange of electronic messages on an electronic messaging system, which in each case will be sufficient for all purposes to evidence a binding supplement to this Agreement. The parties will specify therein or through another effective means that any such counterpart, telex or electronic message constitutes a Confirmation. (f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege. (g) HEADINGS. The headings used in this Agreement are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement. 10. OFFICES; MULTIBRANCH PARTIES (a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a Transaction through an Office other than its head or home office represents to the other party that, notwithstanding the place of booking office or jurisdiction of incorporation or organisation of such party, the obligations of such party are the same as if it had entered into the Transaction through its head or home office. This representation will be deemed to be repeated by such party on each date on which a Transaction is entered into. (b) Neither party may change the Office through which it makes and receives payments or deliveries for the purpose of a Transaction without the prior written consent of the other party. (c) If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make and receive payments or deliveries under any Transaction through any Office listed in the Schedule, and the Office through which it makes and receives payments or deliveries with respect to a Transaction will be specified in the relevant Confirmation. 11. EXPENSES A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement or any ISDA(R) 1992 16 Credit Support Document to which the Defaulting Party is a party or by reason of the early termination of any Transaction, including, but not limited to, costs of collection. 12. NOTICES (a) EFFECTIVENESS. Any notice or other communication in respect of this Agreement may be given in any manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by facsimile transmission or electronic messaging system) to the address or number or in accordance with the electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated:-- (i) if in writing and delivered in person or by courier, on the date it is delivered; (ii) if sent by telex, on the date the recipient's answerback is received; (iii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender's facsimile machine); (iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or (v) if sent by electronic messaging system, on the date that electronic message is received, unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day. (b) CHANGE OF ADDRESSES. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it. 13. GOVERNING LAW AND JURISDICTION (a) GOVERNING LAW. This Agreement will be governed by and construed in accordance with the law specified in the Schedule. (b) JURISDICTION. With respect to any suit, action or proceedings relating to this Agreement ("Proceedings"), each party irrevocably:-- (i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed by English law, or to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City, if this Agreement is expressed to be governed by the laws of the State of New York; and ISDA(R) 1992 17 (ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction (outside, if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment thereof for the time being in force) nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction. (c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent (if any) specified opposite its name in the Schedule to receive, for it and on its behalf, service of process in any Proceedings. If for any reason any party's Process Agent is unable to act as such, such party will promptly notify the other party and within 30 days appoint a substitute process agent acceptable to the other party. The parties irrevocably consent to service of process given in the manner provided for notices in Section 12. Nothing in this Agreement will affect the right of either party to serve process in any other manner permitted by law. (d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest extent permitted by applicable law, with respect to itself and its revenues and assets (irrespective of their use or intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and (v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the extent permitted by applicable law, that it will not claim any such immunity in any Proceedings. 14. DEFINITIONS As used in this Agreement:-- "ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b). "AFFECTED PARTY" has the meaning specified in Section 5(b). "AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event consisting of an Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination Event, all Transactions. "AFFILIATE" means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, "control" of any entity or person means ownership of a majority of the voting power of the entity or person. ISDA(R) 1992 18 "APPLICABLE RATE" means:-- (a) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate; (b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate; (c) in respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and (d) in all other cases, the Termination Rate. "BURDENED PARTY" has the meaning specified in Section 5(b). "CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification of, or any change in or amendment to, any law (or in the application or official interpretation of any law) that occurs on or after the date on which the relevant Transaction is entered into. "CONSENT" includes a consent, approval, action, authorisation, exemption, notice, filing, registration or exchange control consent. "CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b). "CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as such in this Agreement. "CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule. "DEFAULT RATE" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum. "DEFAULTING PARTY" has the meaning specified in Section 6(a). "EARLY TERMINATION DATE" means the date determined in accordance with Section 6(a) or 6(b)(iv). "EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable, in the Schedule. "ILLEGALITY" has the meaning specified in Section 5(b). "INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in respect of a payment under this Agreement but for a present or former connection between the jurisdiction of the government or taxation authority imposing such Tax and the recipient of such payment or a person related to such recipient (including, without limitation, a connection arising from such recipient or related person being or having been a citizen or resident of such jurisdiction, or being or having been organised, present or engaged in a trade or business in such jurisdiction, or ISDA(R) 1992 19 having or having had a permanent establishment or fixed place of business in such jurisdiction, but excluding a connection arising solely from such recipient or related person having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or a Credit Support Document). "LAW" includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the practice of any relevant governmental revenue authority) and "LAWFUL" and "UNLAWFUL" will be construed accordingly. "LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other payment, in the place where the relevant account is located and, if different, in the principal financial centre, if any, of the currency of such payment, (c) in relation to any notice or other communication, including notice contemplated under Section 5(a)(i), in the city specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section 2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction. "LOSS" means, with respect to this Agreement or one or more Terminated Transactions, as the case may be, and a party, the Termination Currency Equivalent of an amount that party reasonably determines in good faith to be its total losses and costs (or gain, in which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at the election of such party but without duplication, loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and out-of-pocket expenses referred to under Section 11. A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets. "MARKET QUOTATION" means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market-makers. Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the "Replacement Transaction") that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether ISDA(R) 1992 20 the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation as such party and the Reference Market-maker may, in good faith, agree. The party making the determination (or its agent) will request each Reference Market-maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be determined. "NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant amount. "NON-DEFAULTING PARTY" has the meaning specified in Section 6(a). "OFFICE" means a branch or office of a party, which may be such party's head or home office. "POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default. "REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market selected by the party determining a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the criteria that such party applies generally at the time in deciding whether to offer or to make an extension of credit and (b) to the extent practicable, from among such dealers having an office in the same city. "RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in which the party is incorporated, organised, managed and controlled or considered to have its seat, (b) where an Office through which the party is acting for purposes of this Agreement is located, (c) in which the party executes this Agreement and (d) in relation to any payment, from or through which such payment is made. "SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be made under Section 2(a)(i) with respect to a Transaction. ISDA(R) 1992 21 "SET-OFF" means set-off, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer. "SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination Date, the sum of: -- (a) the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is determined; and (b) such party's Loss (whether positive or negative and without reference to any Unpaid Amounts) for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be determined or would not (in the reasonable belief of the party making the determination) produce a commercially reasonable result. "SPECIFIED ENTITY" has the meanings specified in the Schedule. "SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money. "SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction (including an agreement with respect thereto) now existing or hereafter entered into between one party to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement (or any Credit Support Provider of such other party or any applicable Specified Entity of such other party) which is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified Transaction in this Agreement or the relevant confirmation. "STAMP TAX" means any stamp, registration, documentation or similar tax. "TAX" means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature (including interest, penalties and additions thereto) that is imposed by any government or other taxing authority in respect of any payment under this Agreement other than a stamp, registration, documentation or similar tax. "TAX EVENT" has the meaning specified in Section 5(b). "TAX EVENT UPON MERGER" has the meaning specified in Section 5(b). ISDA(R) 1992 22 "TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a) if resulting from a Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all Transactions (in either case) in effect immediately before the effectiveness of the notice designating that Early Termination Date (or, if "Automatic Early Termination" applies, immediately before that Early Termination Date). "TERMINATION CURRENCY" has the meaning specified in the Schedule. "TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in the Termination Currency, such Termination Currency amount and, in respect of any amount denominated in a currency other than the Termination Currency (the "Other Currency"), the amount in the Termination Currency determined by the party making the relevant determination as being required to purchase such amount of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market Quotation or Loss (as the case may be), is determined as of a later date, that later date, with the Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent (selected as provided below) for the purchase of such Other Currency with the Termination Currency at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date as would be customary for the determination of such a rate for the purchase of such Other Currency for value on the relevant Early Termination Date or that later date. The foreign exchange agent will, if only one party is obliged to make a determination under Section 6(e), be selected in good faith by that party and otherwise will be agreed by the parties. "TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon Merger or an Additional Termination Event. "TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of funding such amounts. "UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination Date, the aggregate of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would have become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or prior to such Early Termination Date and which has not been so settled as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the extent permitted under applicable law) interest, in the currency of such amounts, from (and including) the date such amounts or obligations were or would have been required to have been paid or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts of interest will be calculated on the basis of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred to in clause (b) above shall be reasonably determined by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it shall be the average of the ISDA(R) 1992 23 Termination Currency Equivalents of the fair market values reasonably determined by both parties. IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document. Merrill Lynch Capital Services, Inc. U.S. Bank Trust National Association in its capacity as Subordination Agent on behalf of the Trustee under the Class G Trust Agreement By: ________________________________ By: _______________________________ Name: Name: Title: Title: ISDA(R) 1992 24 (MULTICURRENCY - CROSS BORDER) ISDA(R) International Swaps and Derivatives Association, Inc. SCHEDULE to the MASTER AGREEMENT dated as of January 30, 2003 between MERRILL LYNCH CAPITAL SERVICES, INC. and U.S. BANK TRUST NATIONAL ASSOCIATION, a corporation organized under the a national banking association, in laws of the State of Delaware its capacity as Subordination Agent on behalf of the Trustee under the ("PARTY A") Pass Through Trust Agreement dated as of November 16, 2000 between State Street Bank and Trust Company of Connecticut, National Association, and Delta Air Lines, Inc., as supplemented by the Trust Supplement No. 2003-1G dated as of January 30, 2003 ("PARTY B") PART 1 TERMINATION PROVISIONS (a) SPECIFIED ENTITY. None. (b) SPECIFIED TRANSACTION. Specified Transaction will have the meaning specified in Section 14. (c) EVENTS OF DEFAULT. The "Events of Default" set forth in Section 5(a) will not apply to Party B but will apply to Party A (subject to clause (d) below). (d) CROSS DEFAULT. The "Cross Default" provision of Section 5(a)(vi) will not apply. (e) TERMINATION EVENTS. The "Illegality" provisions of Section 5(b)(i), the "Tax Event" provisions of Section 5(b)(ii), the "Tax Event Upon Merger" provisions of Section 5(b)(iii) and the "Credit Event Upon Merger" provisions of Section 5(b)(iv) (as amended below) will apply to Party A but will not apply to Party B. Party A shall be the sole Affected Party (under Section 5(b)(i), (ii) and 5(b)(iv)) and the sole Burdened Party (under Section 5(b)(iii)) with respect to a Termination Event. (f) CREDIT EVENT UPON MERGER. The "Credit Event Upon Merger" provisions in Section 5(b)(iv) are hereby amended by: (I) deleting in the fourth line thereof the words "another entity" and replacing them with the words "or reorganizes, incorporates, reincorporates, reconstitutes, or reforms into or as, or receives all or substantially all of the assets and/or liabilities or obligations of, another entity or X, such Credit Support Provider, or such Specified Entity, as the case may ISDA(R) 1992 25 be, effects a recapitalization, liquidating dividend, leveraged buy-out, other similar highly-leveraged transaction, or stock buy-back or similar call on equity,"; (II) deleting in the fifth line thereof the words "the resulting, surviving or transferee" and replacing them with the words "X, such Credit Support Provider, or such Specified Entity, as the case may be, or any resulting, surviving, transferee, reorganized, reconstituted, reformed, or recapitalized"; and (III) deleting in the seventh line thereof the words "its successor or transferee" and replacing them with the words "any resulting, surviving, transferee, reorganized, reconstituted, reformed, or recapitalized entity". (g) AUTOMATIC EARLY TERMINATION. The "Automatic Early Termination" provision of Section 6(a) will not apply. (h) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT. Sections 6(b)(ii)-(iv) are deleted in their entirety and replaced by the following: "(ii) REPLACEMENT ON TERMINATION EVENT. Upon the occurrence of a Termination Event (other than an Additional Termination Event) with respect to Party A, Party A shall have the right within 20 days of the date of such Termination Event, at its own expense, to arrange for one or more Replacement Above-Cap Liquidity Providers to enter into and deliver to Party B a Replacement Above-Cap Liquidity Facility for such Above-Cap Liquidity Facility. If Party A does not arrange for such replacement and if the Above-Cap Liquidity Facility has not otherwise been replaced by Delta Air Lines, Inc. (at the expense of Delta Air Lines, Inc.) in accordance with the terms of Section 3.06(c)(ii) of the Intercreditor Agreement, such 20th day (or if such 20th day is not a Business Day, the next succeeding Business Day) shall be deemed to be an "Early Termination Date" and Party A shall make a termination payment to Party B in accordance with Part 1(j) of this Schedule. For the avoidance of doubt, Party B shall have no right to designate an Early Termination Date following the occurrence of any Termination Event. (i) CALCULATIONS. The "Payment Date" provisions in Section 6(d)(ii) are deleted in their entirety and replaced by the following: "The Termination Amount calculated as being due in respect of any Early Termination Date under Section 6(e) will be payable on such Early Termination Date." (j) PAYMENTS ON EARLY TERMINATION. Section 6(e) is deleted in its entirety and replaced with the following: "Upon the occurrence or designation of an Early Termination Date with respect to the Transaction evidenced by the Confirmation, Party A shall make a termination payment to Party B on the Early Termination Date and in an amount equal to the "Termination Amount" for the Early Termination Date for credit to the Above-Cap Reserve Account (as provided in Section 3.06(f) of the Intercreditor Agreement) to be applied as set forth in said Section 3.06(f) plus all Unpaid Amounts due and payable by Party A under the Confirmation on or prior to the Early Termination Date and upon such payments the Transaction evidenced by the Confirmation shall terminate. "Termination Amount" means, for any Early Termination Date, the amount obtained by solving the following formula for TA: TA = (20% per annum - CR) x N x F where CR = the Cap Rate designated in the Confirmation N = the Notional Amount for such date F = 1.528 For the avoidance of doubt, the Termination Amount shall not exceed US$ 49,362,952.98 at any time." (k) TERMINATION CURRENCY. "Termination Currency" means United States Dollars. ISDA(R) 1992 26 (l) ADDITIONAL TERMINATION EVENT. Additional Termination Event will apply solely as specified in the Confirmation. (m) LIMITATIONS ON CONDITIONS PRECEDENT. Notwithstanding Section 2(a), the obligation of Party A to make each payment specified in the Confirmation, so long as it shall remain in effect, shall not be subject to any conditions precedent, and, without limiting the foregoing, Party A agrees that it will make each such payment without offset, counterclaim or defense. PART 2 TAX REPRESENTATIONS (a) PAYER TAX REPRESENTATIONS. For the purpose of Section 3(e), Party A and Party B each make the following representation: It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e) or 6(e)) to be made by it to the other party under this Agreement. In making this representation, it may rely on: (i) the accuracy of any representation made by the other party pursuant to Section 3(f); (ii) the satisfaction of the agreement of the other party contained in Section 4(a)(i) or 4(a)(iii) and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii); and (iii) the satisfaction of the agreement of the other party contained in Section 4(d); provided that it shall not be a breach of this representation where reliance is placed on clause (ii), and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position. (b) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f), (i) Party A represents that it is a corporation organized under the laws of the State of Delaware. (ii) Party B represents that it is a national banking association organized under the laws of the United States. PART 3 AGREEMENT TO DELIVER DOCUMENTS For the purpose of Section 4(a)(ii) of this Agreement, each party agrees to deliver the following documents, as applicable:
COVERED PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO BE BY SECTION 3(d) DELIVER DOCUMENTS CERTIFICATE DELIVERED REPRESENTATION Party A and Party B Evidence reasonably satisfactory Upon execution of this Yes to the other party as to the Agreement and the related names, true signatures and Confirmation authority of the officer or officials signing this Agreement or the Confirmation on its behalf
ISDA(R) 1992 27 Party A A copy of the annual report for Upon request, as soon as Yes Party A containing audited and publicly available certified financial statements for the most recently ended financial year Party A Opinions of counsel to Party A Upon execution of this Agreement No and its Credit Support Provider reasonably satisfactory in form and substance to Party B with respect to this Agreement and the Credit Support Document specified in Part 4(e) Party B Certified copies of all documents Upon execution of this Agreement Yes evidencing the necessary corporate authorizations and approvals with respect to the execution, delivery, and performance of derivatives transactions Party A Correct, complete and executed Upon execution of this Not applicable U.S. Internal Revenue Form W-9 or Agreement, upon the appointment any successor thereto of a successor Subordination Agent, and at any time upon reasonable request by Party B Party B Correct, complete and executed Upon execution of this Not applicable U.S. Internal Revenue Form W-9 or Agreement, upon the appointment any successor thereto of a successor Subordination Agent, and at any time upon reasonable request by Party A Party A Credit Support Document specified Upon execution of this Agreement Yes in Part 4(e)
PART 4 MISCELLANEOUS (a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a): (i) Address for notices or communications to Party A: Address: Merrill Lynch Capital Services, Inc. Merrill Lynch World Headquarters 4 World Financial Center New York, New York 10080 Attention: Swap Group Facsimile: (646) 805-0218 Telephone: (212) 449-7403 ISDA(R) 1992 28 Additionally, a copy of all notices pursuant to Sections 5, 6 and 7 as well as any changes to Party B's address, telephone number or facsimile number shall be sent to: Address: GMI Counsel Merrill Lynch World Headquarters 4 World Financial Center - 12th Floor New York, New York 10080 Attention: Swap Legal Facsimile: (212) 449-6993 (ii) Address for notices or communications to Party B: Address: U.S. Bank Trust National Association 225 Asylum Street Goodwin Square Hartford, Connecticut 06103 Attention: Corporate Trust Division Telephone: (860) 244-1844 Facsimile: (860) 244-1881 (b) OFFICES. The provisions of Section 10(a) will apply to this Agreement. (c) MULTIBRANCH PARTY. For the purpose of Section 10(c): Party A is not a Multibranch Party. Party B is not a Multibranch Party. (d) CALCULATION AGENT. The Calculation Agent is Party A, provided that if Party B disagrees with respect to any calculation or determination, Party A and Party B each will appoint an independent Reference Market-maker, and such two Reference Market-makers jointly will appoint a third Reference Market-maker. Such three Reference Market-makers jointly will make such calculation or determination (acting as experts and not as arbitrators), whose calculation or determination will be binding and conclusive absent manifest error. Party A shall assume the expense associated with such calculation or determination. In addition, if an Event of Default with respect to Party A has occurred and is continuing, Party B may appoint one of the following five entities as Calculation Agent: JP Morgan Chase, UBS AG, Bank of America, N.A., Deutsche Bank AG or Citibank, N.A. (e) CREDIT SUPPORT DOCUMENTS. Party A shall deliver an unconditional and irrevocable guarantee dated as of January 30, 2003 from Merrill Lynch & Co., Inc. in favor of Party A and such guarantee shall be a Credit Support Document with respect to Party A. With respect to Party B: None. (f) CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to Party A: Merrill Lynch & Co., Inc. Credit Support Provider means in relation to Party B: None. (g) GOVERNING LAW. This Agreement and each Confirmation will be governed by and construed in accordance with the laws of the State of New York. (h) NETTING OF PAYMENTS. The Netting provision set forth in Section 2(c) will not apply to any Transaction. (i) AFFILIATE. Affiliate will have the meaning specified in Section 14. (j) COVERED TRANSACTION. The Transaction evidenced by the Confirmation dated the date of this Agreement (Reference Number: 03DL00985) will constitute the only Transaction and Confirmation supplementing, forming part of, and subject to, this Agreement. ISDA(R) 1992 29 PART 5 OTHER PROVISIONS (a) DEFINITIONS. This Agreement and the Transaction between the parties are subject to the 2000 ISDA Definitions and Annex to the 2000 ISDA Definitions (June 2000 Version) as published by the International Swaps and Derivatives Association, Inc. (collectively, the "Definitions"), and will be governed in all relevant respects by the provisions set forth in the Definitions, without regard to any amendment to the Definitions subsequent to the date hereof. The provisions of the Definitions are incorporated by reference in and shall be deemed a part of this Agreement, except that references in the Definitions to a "Swap Transaction" shall be deemed references to a "Transaction" for purposes of this Agreement. In the event of any inconsistency between the provisions of this Agreement and the Definitions, this Agreement will prevail. "Intercreditor Agreement" as used in this Agreement shall mean the Intercreditor Agreement dated as of January 30, 2003 among U.S. Bank Trust National Association, as Trustee under the Delta Air Lines Pass Through Trust 2003-1G, Delta Air Lines Pass Through Trust 2003-1C, and Delta Air Lines Pass Through Trust 2003-1D, Landesbank Baden-Wurttemberg, as Primary Liquidity Provider, Party A as Above-Cap Liquidity Provider, Party B as Subordination Agent, and Ambac Assurance Corporation as Policy Provider. Capitalized terms used and not defined herein, the Confirmation, or the Definitions shall have the meanings set forth in the Intercreditor Agreement, as amended or modified from time to time in accordance with the terms thereof. (b) NO RELIANCE. Party A and Party B each represent to the other that it is entering into this Agreement and will enter into each Transaction in reliance upon such tax, accounting, regulatory, legal, and financial advice as it deems necessary and not upon any view expressed by the other. (c) WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES ITS RESPECTIVE RIGHT TO JURY TRIAL WITH RESPECT TO ANY LITIGATION ARISING UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTION. (d) NON-PETITION. Party A agrees that it will not, prior to the date that is one year and one day following the final payment of the Certificates (as defined in the Intercreditor Agreement), acquiesce, petition or otherwise invoke or cause, or join in invoking or causing, Party B or any other person or entity to invoke the process of any governmental authority for the purpose of commencing or sustaining a case (whether voluntary or involuntary) against Party B under any bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Party B or any substantial part of its property or ordering the winding-up or liquidation of the affairs of Party B. (e) WAIVER OF RIGHT OF SET-OFF. Notwithstanding any provision of this Agreement, the Confirmation or any other existing or future agreement between the parties hereto, each party irrevocably waives any and all rights it may have to set-off, net, recoup or otherwise withhold or suspend or condition payment or performance of any obligation between the two parties hereunder against any obligations between the two parties, whether arising under any agreement, applicable law or otherwise. (f) AMENDMENTS. This Agreement is hereby further amended as follows: (1) Section 2(b) is hereby amended by the insertion of the following at the end thereof after the word "change": "provided that if such new account shall not be in the same jurisdiction having the same power to tax as the original account, the party not changing its account shall not be obliged to pay any greater amounts and shall not receive less as a result of such change than would have been the case if such change had not taken place." (2) Section 2(d) is amended by adding thereto a new final sentence reading as follows: "Anything in this Section 2(d) to the contrary notwithstanding, Party B shall not be obligated to make any payment under this Section 2(d) to Party A". (3) Section 7 is amended by (A) deleting the "and" at the end of Section 7(a); (B) replacing the period at the end of Section 7(b) with a semi-colon; (C) adding the following as Section 7(c): "any successor to the Subordination Agent appointed in accordance with ISDA(R) 1992 30 Section 7.01(b) of the Intercreditor Agreement shall automatically become Party B to this Agreement."; and (D) adding a new penultimate sentence to Section 7 as follows: "Except as otherwise provided in Section 7.01(b) of the Intercreditor Agreement, any purported transfer under this Section 7 shall require Ratings Confirmation". (4) Section 9(b) is amended by adding thereto a new sentence reading as follows: "In addition, no amendment, modification or waiver in respect of this Agreement will be effective unless Ratings Confirmation is received." (g) LIMITATION OF LIABILITY. The obligations of Party B under this Agreement, and in respect of the Transaction evidenced by the Confirmation, are expressly limited to the extent of funds, if any, made available for such payment to Party B under, and in accordance with, the priorities of payments set forth in Sections 2.04(b), 3.02, 3.03 and 3.06 of the Intercreditor Agreement. No recourse under any obligation, covenant or agreement of Party B contained in this Agreement or the Confirmation shall be had against any incorporator, stockholder, agent, affiliate, officer, employee or trustee of Party B, as such, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise; it being expressly agreed and understood that the agreements of Party B contained in this Agreement or the Confirmation are solely trust obligations of Party B and that no personal liability whatsoever shall attach to or be incurred by the incorporators, stockholders, agents, affiliates, officers, employees or trustees of Party B, as such, or any of them, under or by reason of any of the obligations, covenants or agreements of Party B contained in this Agreement or the Confirmation and that any and all personal liability of every such incorporator, stockholder, agent, affiliate, officer, employee or trustee of Party B for breaches by Party B of any such obligation, covenant or agreement, which liability may arise either at common law or at equity, by statute or constitution, or otherwise, is hereby expressly waived as a condition of and in consideration for the execution of this Agreement; provided, however, that nothing in this paragraph shall relieve any of the foregoing persons from any liability which any such person may otherwise have for his/her or its gross negligence or willful misconduct or, with respect to the handling or transfer of funds, ordinary negligence. (h) ELIGIBLE CONTRACT PARTICIPANT. Each party represents to the other that it is an "eligible contract participant" as defined in Section 1a(12) of the Commodity Exchange Act of 1922 (7 U.S. Code Section 1 et seq.) as amended ("CEA"). This Agreement and the Transaction hereunder are subject to individual negotiation by the parties. Neither this Agreement nor the Transaction hereunder has been executed or traded on a "trading facility" as defined in Section 1a(33) of the CEA. (i) ACCURACY OF SPECIFIED INFORMATION. Section 3(d) is hereby amended by adding in the third line thereof after the word "respect" and before the period the words "or, in the case of audited or unaudited financial statements or balance sheets, a fair representation of the financial condition of the relevant person." ISDA(R) 1992 31 IN WITNESS WHEREOF the parties have executed this Schedule to the ISDA Master Agreement on the respective dates specified below with effect from the date specified on the first page of this document. MERRILL LYNCH CAPITAL SERVICES, INC. By: ______________________________ Name: ______________________________ Title: ______________________________ Date: ______________________________ U.S. BANK TRUST NATIONAL ASSOCIATION in its capacity as Subordination Agent on behalf of the Trustee under the Class G Trust Agreement. By: ______________________________ Name: ______________________________ Title: ______________________________ Date: ______________________________ ISDA(R) 1992 32 Date: January 30, 2003 To: U.S. Bank Trust National Association From: Merrill Lynch Capital Services, Inc. Subject: CLASS G ABOVE CAP LIQUIDITY FACILITY CONFIRMATION REFERENCE NUMBER: 03DL00985 Ladies and Gentlemen: The purpose of this letter agreement (this "Confirmation") is to confirm the terms and conditions of the Interest Rate Cap Transaction entered into on the Trade Date referred to in Paragraph 2 below (the "Transaction") between Merrill Lynch Capital Services, Inc. ("Party A") and U.S. Bank Trust National Association in its capacity as Subordination Agent on behalf of the Trustee under the Pass Through Trust Agreement dated as of November 16, 2000 between State Street Bank and Trust Company of Connecticut, National Association, and Delta Air Lines, Inc., as supplemented by the Trust Supplement No. 2003-1G dated as of January 30, 2003 ("Party B"). This letter agreement constitutes a "Confirmation" as referred to in the ISDA Master Agreement specified below. 1. The definitions and provisions contained in the 2000 ISDA Definitions and Annex to the 2000 ISDA Definitions (June 2000 Version) as published by the International Swaps and Derivatives Association, Inc. (as so supplemented, the "Definitions") are incorporated into this Confirmation. In the event of any inconsistency between the Definitions and this Confirmation, this Confirmation will govern. References herein to a "Transaction" shall be deemed to be references to a "Swap Transaction" for the purposes of the Definitions. This Confirmation supplements, forms a part of, and is subject to the 1992 ISDA Master Agreement (Multicurrency - Cross Border) including the Schedule thereto, dated as of January 30, 2003 as amended and supplemented from time to time (collectively, the "Agreement"), between us. All provisions contained in the Agreement govern this Confirmation except as modified below. In the event of any inconsistency between the Agreement and this Confirmation, this Confirmation will govern. Capitalized terms not otherwise defined in the Agreement or this Confirmation shall have the meanings ascribed to them in the Intercreditor Agreement dated as of January 30, 2003 among U.S. Bank Trust National Association, as Trustee under the Delta Air Lines Pass Through Trust 2003-1G, Delta Air Lines Pass Through Trust 2003-1C, and Delta Air Lines Pass Through Trust 2003-1D, Landesbank Baden-Wurttemberg, as Primary Liquidity Provider, Party A as Above-Cap Liquidity Provider, Party B as Subordination Agent, and Ambac Assurance Corporation as Policy Provider (the "Intercreditor Agreement"). The Agreement and each Confirmation will be governed by and construed in accordance with the laws of the State of New York. ISDA(R) 1992 33 Each of Party A and Party B represents to the other that it has entered into this Transaction in reliance upon such independent accounting, regulatory, legal, tax and financial advice as it deems necessary and not upon any view expressed by the other. 2. Party A and Party B by this Confirmation are entering into a Transaction (the "Above Cap Liquidity Facility") that provides an irrevocable interest rate cap. The terms of the Above Cap Liquidity Facility are as follows: General Terms: Transaction Type: Interest Rate Cap Transaction Notional Amount: The Pool Balance for the Class G Certificates from time to time. The Notional Amount as of any Floating Rate Payer Payment Date shall be determined before giving effect to any distributions on such Certificates on such Floating Rate Payer Payment Date. Trade Date: January 30, 2003 Effective Date: January 30, 2003 Termination Date: The first Business Day following the earlier of (i) July 25, 2009 and (ii) the date on which payment in full of Final Distributions with respect to the Class G Certificates has been made. Currency Unit: USD Business Day Convention: Following Fixed Amounts: Fixed Amount Payer: Party B Fixed Amount Payer Payment January 30, 2003 Date: Fixed Amount: As set forth in a separate letter agreement between Party A and Party B. Floating Amounts: Floating Rate Payer: Party A Floating Amount: On each Floating Rate Payer Payment Date on which the Floating Rate Option exceeds the Cap Rate, the Floating Amount shall be calculated as follows: (i) in the event that the Interest Shortfall (as defined in Paragraph 5 below) is equal to zero, the Floating Amount shall equal zero; ISDA(R) 1992 34 (ii) in the event that there is a non-zero Interest Shortfall and at least one of the following is true: (x) the Maximum Available Commitment under the Primary Liquidity Facility (before giving effect to any Interest Drawing to be made on such Payment Date) is greater than zero, (y) the amount on deposit in the Primary Cash Collateral Account (before giving effect to any withdrawals to be made from such account on such Payment Date) is greater than zero, or (z) the amount on deposit in the Above-Cap Account (before giving effect to any withdrawals to be made from such account on such Payment Date) is greater than zero, the Floating Amount shall equal the Above-Cap Payment (as defined in the Intercreditor Agreement) for such date; and (iii) in the event that there is a non-zero Interest Shortfall and none of the statements in clauses (ii)(x), (ii)(y) and (ii)(z) above are true, the Floating Amount shall equal zero. Period End Dates: Each January 25, April 25, July 25, and October 25, commencing on April 25, 2003 and ending on the Termination Date, subject to adjustment in accordance with the Following Business Day Convention. Floating Rate Payer Payment Dates: Each day that is a Period End Date and any Special Distribution Date under and as defined in the Intercreditor Agreement not coinciding with a Period End Date on which a distribution of interest is, by the terms of the Intercreditor Agreement, to be made on the Class G Certificates. Floating Rate Option: USD-LIBOR-BBA; provided, that, if the relevant rate does not appear on the Telerate Page 3750, the rate shall be "LIBOR" as determined by the Reference Agent under Section 6(b)(ii) of the Reference Agency Agreement. Cap Rate: 11.75% Designated Maturity: 3 months Spread: None Floating Rate Day Count Fraction: Actual/360 Reset Dates: The first day of the relevant Calculation Period. Compounding: Inapplicable Notice: Party B shall, on or before 1:00 p.m. (New York time) on each Floating Rate Payer Payment Date, provide Party A with notice of the then-current Pool Balance and the then-current Interest Shortfall, if any, together with, if such a shortfall exists, the ISDA(R) 1992 35 certificate referred to in the final sentence of Section 3.06(a) of the Intercreditor Agreement. 3. Role of Party A; Role of Calculation Agent (i) Party B acknowledges that: (a) in connection with this Transaction and this Agreement, Party A has acted in the capacity of an arm's-length contractual counterparty and not as its financial advisor or fiduciary; and (b) in exercising its rights or performing any of its duties under this Agreement, Party A will act as principal and not as a fiduciary of Party B. (ii) Whenever the Calculation Agent is required to act or exercise judgment in any way, it will do so in good faith and in a commercially reasonable manner. The calculations and determinations of the Calculation Agent shall be made in accordance with terms of this Confirmation having regard in each case to the criteria stipulated herein. 4. Additional Termination Event/Replacement of Above-Cap Liquidity Provider It will be an Additional Termination Event with respect to Party A if the relevant rating of Merrill Lynch & Co., Inc. issued by any Rating Agency is lower than the applicable Threshold Rating ("Credit Downgrade"). Party A shall be the sole Affected Party with respect to this Additional Termination Event. In the event of a Credit Downgrade or an Event of Default specified in Section 5(a)(iii)(2) of the Agreement, Party A may, within ten days, at its own expense, arrange for one or more Replacement Above-Cap Liquidity Providers to enter into and deliver to Party B a Replacement Above-Cap Liquidity Facility for the Above-Cap Liquidity Facility. If Party A does not arrange for such replacement and if this Above-Cap Liquidity Facility has not otherwise been replaced by Delta Air Lines, Inc. (at the expense of Delta Air Lines, Inc.) in accordance with the terms of Section 3.06(c)(ii) of the Intercreditor Agreement, such 10th day (or if such 10th day is not a Business Day, the next succeeding Business Day) shall be deemed to be an "Early Termination Date" and Party A shall make a termination payment to Party B in accordance with Part 1(j) of the Schedule to the Agreement. 5. Additional Definitions For the purposes of this Confirmation, the following terms shall have the meanings set forth below: "Business Day" and "Local Business Day" mean, with respect to the Transaction set forth in this Confirmation, "Business Day" as defined in the Intercreditor Agreement for all purposes under the Agreement. "Interest Shortfall" means, on any Floating Rate Payer Payment Date, the additional amount required in order for Party B to have sufficient funds to pay interest (calculated at the applicable Stated Interest Rate) due on any Certificates, after giving effect to the provisions of the Intercreditor Agreement ISDA(R) 1992 36 (but without regard to drawings under the Primary Liquidity Facility or withdrawals from the Primary Cash Collateral Account or Above-Cap Account). 6. Payments Party A hereby irrevocably instructs Party B to make any payment due to Party A directly to the account specified below in the name of Party A. Party B hereby irrevocably instructs Party A to make any payments of Floating Amounts and any Termination Amount due to Party B directly to the account(s) specified below in the name of Party B. All payments by Party A of Floating Amounts and any Termination Amount due to Party B shall be made prior to 4:00 p.m. (New York City time) on the date such payment is due without setoff, deduction, withholding, netting, or any other reduction. 7. Account Details Payments to Party A: Bankers Trust Company New York, New York ABA#: 021 0010 33 Account#: 00-811-874 FAO: DLR: Dollar Swaps: Merrill Lynch Capital Services, Inc., New York, New York Reference: US Dollar Swap Account Payments to Party B: U.S. Bank Trust National Association ABA#: 091-000-022 Account#: 173103321092 Account Name: Corporate Trust Reference: 132691-010 Delta Air Lines Attention: TFM - Alice Menezes 8. Offices The Office of Party A for the Transaction is its office at the address specified for notices to it in the Schedule to the Agreement. The Office of Party B for the Transaction is its office at the address specified for notices to it in the Schedule to the Agreement. 9. Counterparts This Confirmation may be executed in any number of counterparts and by each party hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Confirmation. ISDA(R) 1992 37 Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us. Yours sincerely, MERRILL LYNCH CAPITAL SERVICES, INC. By: _____________________________ Name: _____________________________ Title: _____________________________ Confirmed as of the date first written above: U.S. BANK TRUST NATIONAL ASSOCIATION in its capacity as Subordination Agent on behalf of the Trustee under the Class G Trust Agreement By: _____________________________ Name: _____________________________ Title: _____________________________ ISDA(R) 1992 38 EX-4.7 8 g83137exv4w7.txt REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.7 REGISTRATION RIGHTS AGREEMENT Dated January 30, 2003 Among DELTA AIR LINES, INC. U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as Trustee and MORGAN STANLEY & CO. INCORPORATED MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED CREDIT LYONNAIS SECURITIES (USA) INC. DEUTSCHE BANK SECURITIES INC. ING FINANCIAL MARKETS LLC J.P. MORGAN SECURITIES INC. SALOMON SMITH BARNEY INC. U.S. BANCORP PIPER JAFFRAY INC. REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (the "AGREEMENT") is made and entered into on January 30, 2003, among DELTA AIR LINES, INC., a Delaware corporation (the "COMPANY"), U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee under the Class G Trust (as defined below) (the "TRUSTEE") and MORGAN STANLEY & CO. INCORPORATED ("MORGAN STANLEY"), MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, CREDIT LYONNAIS SECURITIES (USA) INC., DEUTSCHE BANK SECURITIES INC., ING FINANCIAL MARKETS LLC, J.P. MORGAN SECURITIES INC., SALOMON SMITH BARNEY INC. and U.S. BANCORP PIPER JAFFRAY INC. (together, the "INITIAL PURCHASERS"). This Agreement is made pursuant to the Purchase Agreement, dated January 24, 2003, among the Company and the Initial Purchasers (the "PURCHASE AGREEMENT"), which provides for the sale to the Initial Purchasers of $391,583,000.00 aggregate principal amount of the Company's pass through certificates, Series 2003-1G (the "INITIAL CERTIFICATES"). In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company has agreed to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing under the Purchase Agreement. The Initial Certificates will be issued pursuant to the Pass Through Trust Agreement, dated November 16, 2000, between the Company and the Trustee (the "BASIC AGREEMENT"), as supplemented with respect to the Initial Certificates by a Trust Supplement, dated as of January 30, 2003 (the "TRUST SUPPLEMENT", the Basic Agreement as supplemented by the Trust Supplement being referred to herein as the "DESIGNATED AGREEMENT"), between the Company and the Trustee, in the aggregate amount and with the applicable interest rate and final expected distribution date set forth on Schedule II hereto on the terms and conditions stated herein. The Trust Supplement relates to the creation and administration of the Delta Air Lines Pass Through Trust, Series 2003-1G (the "CLASS G TRUST"). In consideration of the foregoing, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "1933 ACT" shall mean the Securities Act of 1933, as amended from time to time. "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended from time to time. "AGREEMENT" shall have the meaning set forth in the preamble. "BASIC AGREEMENT" shall have the meaning set forth in the third paragraph of this Agreement. "CLOSING DATE" shall have the meaning set forth in the Purchase Agreement. "COMPANY" shall have the meaning set forth in the preamble and shall also include the Company's successors. "DESIGNATED AGREEMENT" shall have the meaning set forth in the third paragraph of this Agreement. "EXCHANGE CERTIFICATES" shall mean pass through certificates issued under the Designated Agreement of equal outstanding principal amount as and containing terms identical to the Initial Certificates (except that (i) interest thereon shall accrue from the last date on which interest was paid on the Initial Certificates or, if no such interest has been paid, from the Closing Date, (ii) the transfer restrictions thereon shall be modified or eliminated, as appropriate and (iii) provisions relating to an increase in the stated rate of interest thereon shall be eliminated), including having the benefit of the Policy (as defined in the Purchase Agreement), to be offered to Holders of the Initial Certificates in exchange for such Initial Certificates pursuant to the Exchange Offer. "EXCHANGE DATE" shall have the meaning set forth in Section 2(a)(ii) of this Agreement. "EXCHANGE OFFER" shall mean the exchange offer by the Company of Exchange Certificates for Registrable Certificates pursuant to Section 2(a) hereof. "EXCHANGE OFFER REGISTRATION" shall mean a registration under the 1933 Act effected pursuant to Section 2(a) hereof. "EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form) and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "HOLDER" shall mean each Initial Purchaser, for so long as it owns any Registrable Certificates, and each of its successors, assigns and direct and indirect transferees who become owners of Registrable Certificates under the Designated Agreement; provided that for purposes of Sections 4 and 5 of this Agreement, the term "Holder" shall include Participating Broker-Dealers (as defined in Section 4(a)). "INITIAL CERTIFICATES" shall have the meaning set forth in the second paragraph of this Agreement. "INITIAL PURCHASERS" shall have the meaning set forth in the preamble. 2 "INTEREST PERIOD" has the meaning specified in the Reference Agency Agreement dated as of January 30, 2003, among the Company, State Street Bank and Trust Company of Connecticut, National Association ("STATE STREET"), as Subordination Agent under the Intercreditor Agreement, State Street, as Loan Trustee (as defined in the Intercreditor Agreement), and State Street, as reference agent thereunder. "MAJORITY HOLDERS" shall mean the Holders of a majority of the aggregate principal amount of outstanding Registrable Certificates; provided that whenever the consent or approval of Holders of a specified percentage of Registrable Certificates is required hereunder, Registrable Certificates held by the Company or any of its affiliates (as such term is defined in Rule 405 under the 1933 Act) (other than the Initial Purchasers or subsequent Holders of Registrable Certificates if such subsequent holders are deemed to be such affiliates solely by reason of their holding of such Registrable Certificates) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount. "MORGAN STANLEY" shall have the meaning set forth in the preamble. "PERSON" shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. "PROSPECTUS" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Certificates covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including all material incorporated by reference therein. "PURCHASE AGREEMENT" shall have the meaning set forth in the second paragraph of this Agreement. "REGISTRABLE CERTIFICATES" shall mean the Initial Certificates; provided, however, that the Initial Certificates shall cease to be Registrable Certificates upon the earliest to occur of (i) the consummation of the Exchange Offer, (ii) a Registration Statement with respect to such Initial Certificates having been declared effective under the 1933 Act and such Initial Certificates having been disposed of pursuant to such Registration Statement, (iii) such Initial Certificates having been sold to the public pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under the 1933 Act or (iv) such Initial Certificates having ceased to be outstanding. "REGISTRATION EXPENSES" shall mean any and all expenses incident to performance of or compliance by the Company with this Agreement, including without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualification of any of the 3 Exchange Certificates or Registrable Certificates), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing of any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements and other documents relating to the performance of and compliance with this Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Designated Agreement under applicable securities laws, (vi) the fees and disbursements of the Trustee and its counsel, (vii) the fees and disbursements of counsel for the Company and, in the case of a Shelf Registration Statement, the fees and disbursements of one counsel for the Holders (which counsel shall be selected by the Majority Holders and which counsel may also be counsel for the Initial Purchasers) and (viii) the fees and disbursements of the independent public accountants of the Company, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, but excluding fees and expenses of counsel to the underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Certificates by a Holder. "REGISTRATION STATEMENT" shall mean any registration statement of the Company that covers any of the Exchange Certificates or Registrable Certificates pursuant to the provisions of this Agreement and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "SEC" shall mean the Securities and Exchange Commission. "SHELF REGISTRATION" shall mean a registration effected pursuant to Section 2(b) hereof. "SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration statement of the Company pursuant to the provisions of Section 2(b) of this Agreement which covers all of the Registrable Certificates (but no other securities unless approved by the Holders whose Registrable Certificates are covered by such Shelf Registration Statement) on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "TIA" shall have the meaning set forth in Section 3(l) of this Agreement. "TRUST SUPPLEMENT" shall have the meaning set forth in the third paragraph of this Agreement. "TRUSTEE" shall have the meaning set forth in the preamble and shall also include the Trustee's successors. "UNDERWRITERS" shall have the meaning set forth in Section 3 hereof. 4 "UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall mean a registration under the 1933 Act in which Registrable Certificates are sold to an Underwriter for reoffering to the public. 2. Registration Under the 1933 Act. (a) To the extent not prohibited by any applicable law or applicable interpretation of the Staff of the SEC, the Company shall use its reasonable best efforts (i) to cause to be filed with the SEC an Exchange Offer Registration Statement covering the offer by the Company to the Holders to exchange all of the Registrable Certificates for Exchange Certificates, (ii) to have the Exchange Offer Registration Statement declared effective and (iii) to have such Registration Statement remain effective until the closing of the Exchange Offer. The Company shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement has been declared effective by the SEC and use its reasonable best efforts to have the Exchange Offer consummated not later than 60 days after such effective date. The Company shall, or shall cause the Trustee to, commence the Exchange Offer by mailing the Exchange Offer Prospectus and accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law: (i) that the Exchange Offer is being made pursuant to this Agreement and that all Registrable Certificates validly tendered will be accepted for exchange; (ii) the dates of acceptance for exchange (which shall be a period of at least 20 business days from the date such notice is mailed) (the "EXCHANGE DATE"); (iii) that any Registrable Certificate not tendered will remain outstanding and continue to accrue interest, but will not retain any rights under this Registration Rights Agreement; (iv) that Holders electing to have a Registrable Certificate exchanged pursuant to the Exchange Offer will be required to surrender such Registrable Certificate, together with the enclosed letters of transmittal, to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice prior to the close of business on the last Exchange Date; and (v) that Holders will be entitled to withdraw their election, not later than the close of business on the last Exchange Date, by sending to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Certificates delivered for exchange and a statement that such Holder is withdrawing his election to have such Certificates exchanged. As soon as practicable after the last Exchange Date, the Company shall or shall cause the Trustee to: (i) accept for exchange Registrable Certificates or portions thereof tendered and not validly withdrawn pursuant to the Exchange Offer; and 5 (ii) deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Certificates or portions thereof so accepted for exchange by the Company and issue, and cause the Trustee to promptly authenticate and mail to each Holder, Exchange Certificates equal in principal amount to the principal amount of the Registrable Certificates surrendered by such Holder. The Company shall use its reasonable best efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the 1933 Act, the 1934 Act and other applicable laws, rules and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate applicable law or any applicable interpretation of the Staff of the SEC. The Company shall inform the Initial Purchasers of the names and addresses of the Holders to whom the Exchange Offer is made, and the Initial Purchasers shall have the right, subject to applicable law, to contact such Holders and otherwise facilitate the tender of Registrable Certificates in the Exchange Offer. Each Holder participating in the Exchange Offer shall be required to represent to the Company at or prior to the consummation of the Exchange Offer that (i) any Exchange Certificates received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Initial Certificates or the Exchange Certificates within the meaning of the 1933 Act, and (iii) such Holder is not an "affiliate," as defined in Rule 405 of the 1933 Act, of the Company or the Trustee, nor a broker-dealer tendering Initial Certificates acquired directly from the Company or the Class G Trust for its own account. If such Holder is a broker-dealer, it will be required to represent that the Initial Certificates were acquired as a result of market-making activities or other trading activities and that it will deliver a prospectus in connection with any resale of such Exchange Certificates. Each such Holder, whether or not it is a broker-dealer, shall also represent that it is not acting on behalf of any person that could not truthfully make any of the foregoing representations contained in this paragraph. Upon consummation of the Exchange Offer in accordance with this Section 2(a), the provisions of this Agreement shall continue to apply (to the extent applicable) solely with respect to Registrable Certificates held by the Initial Purchasers or any Participating Broker-Dealers (as defined in Section 4(a)) as provided in (and subject to) Section 2(b)(iii), and the Company shall have no further obligation to register Initial Certificates (other than such Registrable Certificates of the Initial Purchasers and Participating Broker-Dealers) pursuant to Section 2(b) of this Agreement. (b) In the event that (i) the Company determines that the Exchange Offer Registration provided for in Section 2(a) above is not available or may not be consummated as soon as practicable after the last Exchange Date because it would violate applicable law or the applicable interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any other reason consummated by the 270th day from the Closing Date or (iii) the Exchange Offer has been completed and in the opinion of counsel for the Initial Purchasers a Registration Statement must be filed and a Prospectus must be delivered by the Initial Purchasers in connection with any offering or sale of Registrable Certificates, the Company shall use its reasonable best efforts to cause to be filed as soon as practicable after such determination date or notice of such opinion of 6 counsel is given to the Company, as the case may be, a Shelf Registration Statement providing for the sale by the Holders of all of the Registrable Certificates (in the case of clause (i) above) or by the Initial Purchasers (in the case of clause (iii) above) and to have such Shelf Registration Statement declared effective by the SEC. In the event the Company is required to file a Shelf Registration Statement solely as a result of the matters referred to in clause (iii) of the preceding sentence, the Company shall use its reasonable best efforts to file and have declared effective by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Certificates and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Certificates held by the Initial Purchasers after completion of the Exchange Offer. The Company agrees to use its reasonable best efforts to keep the Shelf Registration Statement continuously effective until the expiration of the period referred to in Rule 144(k) with respect to the Registrable Certificates or such shorter period that will terminate when all of the Registrable Certificates covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or may be freely sold pursuant to Rule 144(k) of the 1933 Act. The Company further agrees to supplement or amend the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the 1933 Act or by any other rules and regulations thereunder for shelf registration or if reasonably requested by a Holder with respect to information relating to such Holder, and to use its best efforts to cause any such amendment to become effective and such Shelf Registration Statement to become usable as soon as thereafter practicable. The Company agrees to furnish to the Holders of Registrable Certificates copies of any such supplement or amendment promptly after its being used or filed with the SEC. (c) The Company shall pay all Registration Expenses in connection with the registration pursuant to Section 2(a) and Section 2(b). Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Certificates pursuant to the Shelf Registration Statement. (d) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC; provided, however, that, if, after it has been declared effective, the offering of Registrable Certificates pursuant to a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Shelf Registration Statement will be deemed not to have become effective during the period of such interference until the offering of Registrable Certificates pursuant to such Registration Statement may legally resume. In the event the Exchange Offer is not consummated and the Shelf Registration Statement is not declared effective on or prior to the 270th day (or, if such 270th day is not a business day, the first business day thereafter) after the Closing Date, the interest rate on the Initial Certificates will be increased by 0.25% per annum until the Exchange Offer is consummated or the Shelf Registration Statement is declared effective by the SEC. In the event that the Shelf Registration Statement required to be effective pursuant to Section 2(b) hereof ceases to be effective at any time during the period specified by Section 2(b) hereof for more than 60 days, whether or not consecutive, during any 12-month period, the interest rate borne by the Initial Certificates shall be increased by 0.25% per annum from the 61st day of the applicable 7 12-month period such Shelf Registration Statement ceases to be effective until such time as the Shelf Registration Statement again becomes effective. (e) Without limiting the remedies available to the Initial Purchasers and the Holders, the Company acknowledges that any failure by the Company to comply with its obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to each Initial Purchaser or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's obligations under Section 2(a) and Section 2(b) hereof. 3. Registration Procedures. In connection with the obligations of the Company with respect to the Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the Company shall as reasonably expeditiously as possible: (a) prepare and file with the SEC a Registration Statement on the appropriate form under the 1933 Act, which form (x) shall be selected by the Company, (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Certificates by the selling Holders thereof and (z) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and use its reasonable best efforts to cause such Registration Statement to become effective and remain effective in accordance with Section 2 hereof; (b) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to (x) keep such Registration Statement effective for the applicable period under this Agreement, (y) cause each Prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424 under the 1933 Act and (z) to keep each Prospectus current during the period described under Section 4(3) and Rule 174 under the 1933 Act that is applicable to transactions by brokers or dealers with respect to the Registrable Certificates or Exchange Certificates; (c) in the case of a Shelf Registration, furnish to each Holder of Registrable Certificates, to counsel for the Initial Purchasers, to counsel for the Holders and to each Underwriter of an Underwritten Offering of Registrable Certificates, if any, and each such Underwriter's counsel, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder or Underwriter may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Certificates; and the Company consents to the use of such Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the selling Holders of Registrable Certificates and any such Underwriters in connection with the offering and sale of the Registrable Certificates covered by and in the manner described in such Prospectus or any amendment or supplement thereto in accordance with applicable law; 8 (d) use its reasonable best efforts to register or qualify the Registrable Certificates under all applicable state securities or "blue sky" laws of such jurisdictions as any Holder of Registrable Certificates covered by a Registration Statement shall reasonably request in writing by the time the applicable Registration Statement is declared effective by the SEC, to cooperate with such Holders in connection with any filings required to be made with the National Association of Securities Dealers, Inc. and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in each such jurisdiction of such Registrable Certificates owned by such Holder; provided, however, that the Company shall not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (ii) file any general consent to service of process or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject; (e) in the case of a Shelf Registration, notify each Holder of Registrable Certificates, counsel for the Holders and counsel for the Initial Purchasers promptly and, if requested by any such Holder or counsel, confirm such advice in writing (i) when a Shelf Registration Statement has become effective and when any post-effective amendment thereto has been filed and becomes effective, (ii) of any request by the SEC or any state securities authority for amendments and supplements to a Shelf Registration Statement and Prospectus or for material additional information after the Shelf Registration Statement has become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Shelf Registration Statement or the initiation of any proceedings for that purpose, (iv) if, between the effective date of a Shelf Registration Statement and the closing of any sale of Registrable Certificates covered thereby, the representations and warranties of the Company contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to the offering cease to be true and correct in all material respects or if the Company receives any notification with respect to the suspension of the qualification of the Registrable Certificates for sale in any jurisdiction or the initiation of any proceeding for such purpose, (v) of the happening of any event during the period a Shelf Registration Statement is effective which makes any statement made in such Shelf Registration Statement or the related Prospectus untrue in any material respect or which requires the making of any changes in such Shelf Registration Statement or Prospectus in order to make the statements therein (in the case of the Prospectus, in light of circumstances under which they were made) not misleading and (vi) of any determination by the Company that a post-effective amendment to a Shelf Registration Statement would be appropriate; (f) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment and provide immediate notice to each Holder of the withdrawal of any such order; (g) in the case of a Shelf Registration, furnish to each Holder of Registrable Certificates, without charge, at least one conformed copy of each Shelf Registration Statement and any post-effective amendment thereto (without documents incorporated therein by reference or exhibits thereto, unless requested); 9 (h) in the case of a Shelf Registration, cooperate with the selling Holders of Registrable Certificates to facilitate the timely preparation and delivery of certificates representing Registrable Certificates to be sold and not bearing any restrictive legends and enable such Registrable Certificates to be in such denominations (consistent with the provisions of the Designated Agreement) and registered in such names as the selling Holders may reasonably request at least two business days prior to the closing of any sale of Registrable Certificates; (i) in the case of a Shelf Registration, upon the occurrence of any event contemplated by Section 3(e)(v) hereof, use its best efforts to prepare and file with the SEC a supplement or post-effective amendment to a Shelf Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Certificates, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company agrees to notify the Holders to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and the Holders hereby agree to suspend use of the Prospectus until the Company has amended or supplemented the Prospectus to correct such misstatement or omission; (j) within a reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or any document which is to be incorporated by reference into a Registration Statement or a Prospectus after initial filing of a Registration Statement, provide copies of such document to the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Holders and their counsel) and make such of the representatives of the Company as shall be reasonably requested by the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) available for discussion of such document, and shall not at any time file or make any amendment to the Registration Statement, any Prospectus or any amendment of or supplement to a Registration Statement or a Prospectus or any document which is to be incorporated by reference into a Registration Statement or a Prospectus, of which the Initial Purchasers and their counsel (and, in the case of a Shelf Registration Statement, the Holders and their counsel) shall not have previously been advised and furnished a copy or to which the Initial Purchasers or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) shall object; (k) obtain a CUSIP number for all Exchange Certificates or Registrable Certificates, as the case may be, not later than the effective date of a Registration Statement; (l) cause the Designated Agreement to be qualified under the Trust Indenture Act of 1939, as amended (the "TIA"), in connection with the registration of the Exchange Certificates or Registrable Certificates, as the case may be, cooperate with the Trustee and the Holders to effect such changes to the Designated Agreement as may be required for the Designated Agreement to be so qualified in accordance with the terms of the TIA 10 and execute, and use its best efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable the Designated Agreement to be so qualified in a timely manner; (m) in the case of a Shelf Registration, upon execution of customary confidentiality agreements reasonably satisfactory to the Company and its counsel make available for inspection by a representative of the Holders of the Registrable Certificates, any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, and attorneys and accountants designated by the Holders, at reasonable times and in a reasonable manner, all financial and other records, pertinent documents and properties of the Company, and cause the respective officers, directors and employees of the Company to supply all information reasonably requested by any such representative, Underwriter, attorney or accountant in connection with a Shelf Registration Statement as shall be necessary to enable such persons to conduct a reasonable investigation within the meaning of Section 11 of the 1933 Act; (n) use its reasonable best efforts to cause the Exchange Certificates or Registrable Certificates, as the case may be, to be rated by two nationally recognized statistical rating organizations (as such term is defined in Rule 436(g)(2) under the 1933 Act); (o) if reasonably requested by any Holder of Registrable Certificates covered by a Registration Statement, (i) promptly incorporate in a Prospectus supplement or post-effective amendment such information with respect to such Holder as such Holder reasonably requests to be included therein and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as the Company has received notification of the matters to be incorporated in such filing; (p) in the case of a Shelf Registration, enter into such customary agreements and take all such other actions in connection therewith (including those requested by the Holders of a majority of the Registrable Certificates being sold) in order to expedite or facilitate the disposition of such Registrable Certificates including, but not limited to, an Underwritten Offering and in such connection, (i) to the extent possible, make such representations and warranties to the Holders and any Underwriters of such Registrable Certificates with respect to the business of the Company and its subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference therein, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested, (ii) obtain opinions of counsel to the Company (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Holders of a majority in principal amount of Registrable Certificates being sold and such Underwriters and their respective counsel) addressed to each selling Holder and Underwriter of Registrable Certificates, covering the matters customarily covered in opinions requested in underwritten offerings, (iii) obtain "cold comfort" letters from the independent certified public accountants of the Company (and, if necessary, any other certified public accountant of any subsidiary of the Company, or of any business acquired by the Company for which financial statements and financial data are or are required to 11 be included in the Registration Statement) addressed to each selling Holder and Underwriter of Registrable Certificates, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings, and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable Certificates being sold or the Underwriters, and which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in an underwriting agreement; and In the case of a Shelf Registration Statement, the Company may require each Holder of Registrable Certificates to furnish to the Company such information regarding the Holder and the proposed distribution by such Holder of such Registrable Certificates as the Company may from time to time reasonably request in writing. The Company may exclude from such registration the Registrable Certificates of any Holder who fails to furnish such information within a reasonable time after receiving such request. In the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(e)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Certificates pursuant to a Shelf Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies in its possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Certificates current at the time of receipt of such notice. If the Company shall give any such notice to suspend the disposition of Registrable Certificates pursuant to a Registration Statement, the Company shall extend the period during which the Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders shall have received copies of the supplemented or amended Prospectus necessary to resume such dispositions. The Holders of Registrable Certificates covered by a Shelf Registration Statement who desire to do so may sell such Registrable Certificates in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers (the "UNDERWRITERS") that will administer the offering will be selected by the Majority Holders of the Registrable Certificates included in such offering, subject to the consent of the Company (which shall not be unreasonably withheld). 4. Participation of Broker-Dealers in Exchange Offer. (a) The Staff of the SEC has taken the position that any broker-dealer that receives Exchange Certificates for its own account in the Exchange Offer in exchange for Initial Certificates that were acquired by such broker-dealer as a result of market-making or other trading activities (a "PARTICIPATING BROKER-DEALER"), may be deemed to be an "underwriter" within the meaning of the 1933 Act and must deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Certificates. No Participating 12 Broker-Dealers other than the Initial Purchasers and persons who have obtained the Company's prior written consent to act as a market-maker shall have any rights as Participating Broker-Dealers under this Agreement. The Company understands that it is the Staff's position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Certificates, without naming the Participating Broker-Dealers or specifying the amount of Exchange Certificates owned by them, such Prospectus may be delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligation under the 1933 Act in connection with resales of Exchange Certificates for their own accounts, so long as the Prospectus otherwise meets the requirements of the 1933 Act. (b) In light of Section 4(a) above, notwithstanding the other provisions of this Agreement, the Company agrees that the provisions of this Agreement as they relate to a Shelf Registration shall also apply to an Exchange Offer Registration to the extent, and with such reasonable modifications thereto as may be, reasonably requested by the Initial Purchasers or by one or more Participating Broker-Dealers, in each case as provided in clause (ii) below, in order to expedite or facilitate the disposition of any Exchange Certificates by Participating Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above; provided that: (i) the Company shall not be required to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement, as would otherwise be contemplated by Section 3(i) of this Agreement, for a period exceeding 90 days after the last Exchange Date (as such period may be extended pursuant to the penultimate paragraph of Section 3 of this Agreement) and Participating Broker-Dealers shall not be authorized by the Company to deliver and shall not deliver such Prospectus after such period in connection with the resales contemplated by this Section 4; and (ii) the application of the Shelf Registration procedures set forth in Section 3 of this Agreement to an Exchange Offer Registration, to the extent not required by the positions of the Staff of the SEC or the 1933 Act and the rules and regulations thereunder, will be in conformity with the reasonable request to the Company by the Initial Purchasers or with the reasonable request in writing to the Company by one or more broker-dealers who certify to the Initial Purchasers and the Company in writing that they anticipate that they will be Participating Broker-Dealers; and provided further that, in connection with such application of the Shelf Registration procedures set forth in Section 3 to an Exchange Offer Registration, the Company shall be obligated (x) to deal only with one entity representing the Participating Broker-Dealers, which shall be Morgan Stanley unless it elects not to act as such representative, (y) to pay the fees and expenses of only one counsel representing the Participating Broker-Dealers, which shall be counsel to the Initial Purchasers unless such counsel elects not to so act and (z) to cause to be delivered only one, if any, "cold comfort" letter with respect to the Prospectus in the form existing on the last Exchange Date and with respect to each subsequent amendment or supplement, if any, effected during the period specified in clause (i) above. 13 (c) The Initial Purchasers shall have no liability to the Company or any Holder with respect to any request that it may make pursuant to Section 4(b) above. 5. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless the Initial Purchasers, each Holder and each Person, if any, who controls any Initial Purchaser or any Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under common control with, or is controlled by, any Initial Purchaser or any Holder, from and against all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred by the Initial Purchasers, any Holder or any such controlling or affiliated Person in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment thereto) pursuant to which Exchange Certificates or Registrable Certificates were registered under the 1933 Act, including all documents incorporated therein by reference, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or caused by any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein in light of the circumstances under which they were made not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to the Initial Purchasers or any Holder furnished to the Company in writing through Morgan Stanley or any selling Holder expressly for use therein provided, however, that the foregoing indemnity agreement shall not inure to the benefit of any Holder to the extent that any such losses, claims, damages or liabilities result from the fact that such Holder sold securities to a person to whom there was not sent or given by or on behalf of such Holder (if required by law so to have been delivered) a copy of the final Prospectus (in the case of any preliminary Prospectus) or a prospectus amendment or supplement (in the case of any Prospectus) at or prior to the written confirmation of the sale of the Registrable Certificates to such person if the Company had previously furnished copies thereof to such Holder and such untrue statement or omission or alleged untrue statement or omission was corrected in such final Prospectus or prospectus amendment or supplement, nor shall this indemnity agreement inure to the benefit of any Holder from whom the person asserting any such losses, claims, damages or liabilities purchased the Registrable Certificates concerned if at the time of such purchase such Holder had received written notice from the Company that the use of such Prospectus, amendment, supplement or preliminary Prospectus was suspended as provided in the penultimate paragraph of Section 3. In connection with any Underwritten Offering permitted by Section 3, the Company will also indemnify the Underwriters, if any, dealers and participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the 1933 Act and the 1934 Act) to the same extent as provided above with respect to the indemnification of the Holders, if requested in connection with any Registration Statement. (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Initial Purchasers and the other selling Holders, and each of their respective directors, officers who sign the Registration Statement and each Person, if any, who 14 controls the Company, any Initial Purchaser and any other selling Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from the Company to the Initial Purchasers and the Holders, but only with reference to information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto). (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the "INDEMNIFIED PARTY") shall promptly notify the Person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the reasonable fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Initial Purchaser and all Persons, if any, who control any Initial Purchaser within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, its directors, its officers who sign the Registration Statement and each Person, if any, who controls the Company within the meaning of either such Section and (c) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Holders and Underwriters and all Persons, if any, who control any Holders or Underwriters within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In such case involving the Initial Purchaser and Persons who control the Initial Purchaser, such firm shall be designated in writing by Morgan Stanley. In such case involving the Holders and such Persons who control Holders, such firm shall be designated in writing by the Majority Holders. In all other cases, such firm shall be designated by the Company. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but, if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested in writing an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 90 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party for such fees and expenses of counsel in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending 15 or threatened proceeding in respect of which such indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) If the indemnification provided for in paragraph (a) or paragraph (b) of this Section 5 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company and the Holders shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Holders and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Holders' respective obligations to contribute pursuant to this Section 5(d) are several in proportion to the respective principal amount of Registrable Certificates of such Holder that were registered pursuant to a Registration Statement. (e) The Company and each Holder agree that it would not be just or equitable if contribution pursuant to this Section 5 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 5, no Holder shall be required to indemnify or contribute any amount in excess of the amount by which the total price at which Registrable Certificates were sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. The indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Initial Purchasers, any Holder or any Person controlling any Initial Purchaser or any Holder, or by or on behalf of the Company, its officers or directors or any Person controlling the Company, (iii) acceptance of any of the Exchange Certificates and (iv) any sale of Registrable Certificates pursuant to a Shelf Registration Statement. 16 6. Miscellaneous. (a) No Inconsistent Agreements. The Company has not entered into, and on or after the date of this Agreement will not enter into, any agreement which is inconsistent with the rights granted to the Holders of Registrable Certificates in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's other issued and outstanding securities under any such agreements. (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Certificates affected by such amendment, modification, supplement, waiver or consent; provided, however, that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 5 hereof shall be effective as against any Holder of Registrable Certificates unless consented to in writing by such Holder. (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Initial Purchasers, the address set forth in the Purchase Agreement; and (ii) if to the Company, initially at the Company's address set forth in the Purchase Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next business day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands, or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Designated Agreement. (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Certificates in violation of the terms of the Purchase Agreement or the Designated Agreement. If any transferee of any Holder shall acquire Registrable Certificates, in any manner, whether by operation of law or otherwise, such Registrable Certificates shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Certificates such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to 17 receive the benefits hereof. The Initial Purchasers (in their capacity as Initial Purchasers) shall have no liability or obligation to the Company with respect to any failure by any other Holder to comply with, or any breach by any other Holder of, any of the obligations of such other Holder under this Agreement. (e) Purchases and Sales of Initial Certificates. The Company shall not, and shall use its best efforts to cause its affiliates (as defined in Rule 405 under the 1933 Act) to not, purchase and then resell or otherwise transfer any Initial Certificates prior to the consummation of the Exchange Offer or a Shelf Registration Statement being declared effective. (f) Third Party Beneficiary. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they deem such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Trustee. The Trustee shall take action as may be reasonably requested by the Company in connection with the Company satisfying its obligations arising under this Agreement. 18 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. DELTA AIR LINES, INC. By: -------------------------------------- Name: James M. Whitehurst Title: Senior Vice President Finance, Treasury and Business Development U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as Trustee By: -------------------------------------- Name: Title: Confirmed and accepted as of the date first above written: Morgan Stanley & Co. Incorporated Merrill Lynch, Pierce, Fenner & Smith Incorporated Acting severally on behalf of themselves and the several Initial Purchasers named in Schedule I hereto. MORGAN STANLEY & CO. INCORPORATED By: ------------------------------ Name: Title: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: ------------------------------- Name: Title: SCHEDULE I TO REGISTRATION RIGHTS AGREEMENT Credit Lyonnais Securities (USA) Inc. Deutsche Bank Securities Inc. ING Financial Markets LLC J.P. Morgan Securities Inc. Salomon Smith Barney Inc. U.S. Bancorp Piper Jaffray Inc. EX-4.8 9 g83137exv4w8.txt PARTICIPATION AGREEMENT EXHIBIT 4.8 PARTICIPATION AGREEMENT (N3760C) Dated as of January 30, 2003 among DELTA AIR LINES, INC., U.S. BANK TRUST NATIONAL ASSOCIATION, as Pass Through Trustee under each of the Pass Through Trust Agreements U.S. BANK TRUST NATIONAL ASSOCIATION, as Subordination Agent U.S. BANK TRUST NATIONAL ASSOCIATION, as Loan Trustee and U.S. BANK TRUST NATIONAL ASSOCIATION, in its individual capacity as set forth herein --------------- One Boeing 737-832 Aircraft U.S. Registration No. N3760C TABLE OF CONTENTS
Page ---- ARTICLE 1 DEFINITIONS Section 1.01 Definitions...................................................................................2 Section 1.02 Other Definitional Provisions.................................................................2 ARTICLE 2 THE LOANS Section 2.01 The Loans.....................................................................................2 Section 2.02 Issuance of Equipment Notes...................................................................2 Section 2.03 The Closing...................................................................................3 ARTICLE 3 CONDITIONS PRECEDENT Section 3.01 Conditions Precedent to Obligations of Pass Through Trustees..................................3 Section 3.02 Conditions Precedent to Obligations of Company................................................6 ARTICLE 4 REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF COMPANY Section 4.01 Representations and Warranties of Company.....................................................7 Section 4.02 General Indemnity.............................................................................9 ARTICLE 5 REPRESENTATIONS, WARRANTIES AND COVENANTS OF U.S. BANK Section 5.01 Representations, Warranties and Covenants of U.S. Bank.......................................14 ARTICLE 6 OTHER COVENANTS AND AGREEMENTS Section 6.01 Other Agreements.............................................................................16
-i- Section 6.02 Certain Covenants of Company.................................................................18 ARTICLE 7 MISCELLANEOUS Section 7.01 Notices......................................................................................20 Section 7.02 Survival of Representations, Warranties, Indemnities, Covenants and Agreements...............21 Section 7.03 Governing Law................................................................................21 Section 7.04 Severability.................................................................................21 Section 7.05 No Oral Modifications or Continuing Waivers; Consents........................................21 Section 7.06 Effect of Headings and Table of Contents.....................................................21 Section 7.07 Successors and Assigns.......................................................................21 Section 7.08 Benefits of Agreement........................................................................22 Section 7.09 Counterparts.................................................................................22 Section 7.10 Submission to Jurisdiction...................................................................22 Schedule I - Equipment Notes, Purchasers and Original Principal Amounts Schedule II - Trust Supplements Schedule III - Excess Amount Exhibit A-1 - Form of Opinion of Counsel for Company Exhibit A-2 - Form of Opinion of Cadwalader, Wickersham & Taft, special counsel for Company Exhibit A-3 - Form of ss. 1110 Opinion of Cadwalader, Wickersham & Taft, special counsel for Company Exhibit B - Form of Opinion of Special Counsel for Loan Trustee, Subordination Agent and U.S. Bank Exhibit C - Form of Opinion of Special FAA Counsel Exhibit D-1 - Form of Opinion of Special Counsel for Primary Liquidity Provider Exhibit D-2 - Form of Opinion of German In-House Counsel for Primary Liquidity Provider Exhibit D-3 - Form of Opinion of In-House Counsel for Above Cap Liquidity Provider Exhibit E - Form of Manufacturer's Consent Exhibit F-1 - Form of Opinion of Special Counsel for Pass Through Trustees Exhibit F-2 - Form of Opinion of Special Counsel for Pass Through Trustees Exhibit G - Form of Opinion of In-House Counsel for Policy Provider Annex A - Definitions
-ii- PARTICIPATION AGREEMENT (N3760C) This PARTICIPATION AGREEMENT (N3760C), dated as of January 30, 2003, is made by and among DELTA AIR LINES, INC., a Delaware corporation (together with its successors and permitted assigns, "Company"), U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association (in its individual capacity, together with its successors and permitted assigns, "U.S. Bank"), not in its individual capacity except as otherwise expressly provided in any of the Operative Documents or the Pass Through Documents, but solely as trustee (in such capacity together with any successor or other trustee in such capacity, "Pass Through Trustee") under each of the Pass Through Trust Agreements (such term and other capitalized terms used herein without definition being defined as provided in Section 1.01), U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, as subordination agent and trustee (in such capacity, together with any successor trustee in such capacity, "Subordination Agent") under the Intercreditor Agreement, and U.S. BANK TRUST NATIONAL ASSOCIATION, as loan trustee (in such capacity, together with any successor trustee in such capacity, "Loan Trustee") under the Indenture. WITNESSETH: WHEREAS, Company is the owner of that certain Boeing Model 737-832 aircraft more particularly described in the Indenture Supplement originally executed and delivered under the Indenture; WHEREAS, concurrently with the execution and delivery of this Agreement, Company and Loan Trustee are entering into the Indenture, pursuant to which, among other things, Company will issue three series of Equipment Notes, which Equipment Notes are to be secured by a security interest in all right, title and interest of Company in and to the Aircraft and certain other property described in the Indenture; WHEREAS, pursuant to the Basic Pass Through Trust Agreement and each of the Trust Supplements set forth in Schedule II, concurrently with the execution and delivery of this Agreement, separate Pass Through Trusts are being created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale of Pass Through Certificates; WHEREAS, pursuant to the Intercreditor Agreement, Subordination Agent will hold the Equipment Notes on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS Section 1.01 Definitions. For the purposes of this Agreement, unless the context otherwise requires, capitalized terms used but not defined herein have the respective meanings set forth or incorporated by reference in Annex A. Section 1.02 Other Definitional Provisions. (a) The definitions stated herein and in Annex A apply equally to both the singular and the plural forms of the terms defined. (b) All references in this Agreement to designated "Articles", "Sections", "Subsections", "Schedules", "Exhibits", "Annexes" and other subdivisions are to the designated Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision of this Agreement, unless otherwise specifically stated. (c) The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision. (d) All references in this Agreement to a "government" are to such government and any instrumentality or agency thereof. (e) Unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, they shall be deemed to be followed by the phrase "without limitation". ARTICLE 2 THE LOANS Section 2.01 The Loans. Subject to the terms and conditions of this Agreement and the Indenture, on the Closing Date Pass Through Trustee for each Pass Through Trust shall make a loan to Company by paying to Company the aggregate original principal amounts of the Equipment Notes being issued to such Pass Through Trust as set forth on Schedule I opposite the name of such Pass Through Trust. Pass Through Trustees, on behalf of the Pass Through Trusts, shall make such loans to Company no later than 11:00 a.m. (New York City time) on the Closing Date by transferring such amount in immediately available funds to Company at its account at Citibank, N.A., 111 Wall Street, New York, New York, Account No. 40002617, ABA Number 021000089, with the request that the bank advise Company by telephone at (404) 715-2046 upon transfer of the funds. Section 2.02 Issuance of Equipment Notes. Upon the occurrence of the above payments by Pass Through Trustee for each Pass Through Trust to Company, Company shall issue, pursuant to and in accordance with Article II of the Indenture, to Subordination Agent as agent and trustee for Pass Through Trustee for each Pass Through Trust, one or more Equipment Notes of the maturity and aggregate principal amount set forth in Schedule I opposite the name -2- of such Pass Through Trust. Each such Equipment Note shall be duly authenticated by Loan Trustee pursuant to the Indenture, registered in the name of Subordination Agent and dated the Closing Date and shall be delivered by Loan Trustee to Subordination Agent. Section 2.03 The Closing. The closing (the "Closing") of the transactions contemplated hereby shall take place at the offices of Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York at 9:30 a.m. (New York City time) on January 30, 2003, or at such other time or place as the parties shall agree. ARTICLE 3 CONDITIONS PRECEDENT Section 3.01 Conditions Precedent to Obligations of Pass Through Trustees. The obligation of each Pass Through Trustee to make the loan contemplated by Article II is subject to the fulfillment (or the waiver by such Pass Through Trustee) prior to or on the Closing Date of the following conditions precedent: (a) Company shall have tendered the Equipment Notes to Loan Trustee for authentication, and Loan Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to Subordination Agent on behalf of the applicable Pass Through Trustee in accordance with Section 2.02. (b) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it a violation of law or governmental regulations for Pass Through Trustees to make the loans contemplated by Section 2.01 or to acquire the Equipment Notes. (c) This Agreement and the following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Pass Through Trustees or Loan Trustee), shall be in full force and effect and executed counterparts (or copies thereof where indicated) thereof shall have been delivered to each Pass Through Trustee: (i) the Intercreditor Agreement; (ii) the Liquidity Facilities; (iii) the Pass Through Trust Agreements; (iv) the Indenture and the Indenture Supplement covering the Aircraft and dated the Closing Date; (v) the Manufacturer's Consent; (vi) a copy of the FAA Bill of Sale; and (vii) a copy of the Warranty Bill of Sale. -3- (d) A Uniform Commercial Code financing statement or statements covering the security interest created by the Indenture shall have been executed and delivered by Company, as debtor, and by Loan Trustee, as secured party, and such financing statement or statements shall have been duly filed in all places necessary or desirable within the State of Delaware. (e) Each Pass Through Trustee shall have received the following: (i) a certificate dated the Closing Date of the Secretary or an Assistant Secretary of Company, certifying as to (A) a copy of the resolutions of the Board of Directors of Company or the executive committee thereof duly authorizing the transactions contemplated hereby and the execution, delivery and performance by Company of this Agreement and the Indenture and each other document required to be executed and delivered by Company in accordance with the provisions hereof or thereof and (B) a copy of the certificate of incorporation and by-laws of Company, as in effect on the Closing Date; (ii) a certificate or other evidence from the Secretary of State of the State of Delaware, dated as of a date reasonably near the Closing Date, as to the due incorporation and good standing of Company in such state; (iii) an incumbency certificate of Company as to the person or persons authorized to execute and deliver this Agreement, the Indenture and each other document to be executed by Company in connection with the transactions contemplated hereby and thereby, and the specimen signatures of such person or persons; and (iv) one or more certificates of Loan Trustee and Subordination Agent certifying to the reasonable satisfaction of Pass Through Trustees as to the due authorization, execution, delivery and performance by Loan Trustee and Subordination Agent of each of the Operative Documents to which Loan Trustee or Subordination Agent is or will be a party and any other documents to be executed by or on behalf of Loan Trustee or Subordination Agent in connection with the transactions contemplated hereby or thereby. (f) On the Closing Date, the following statements shall be correct: (i) the representations and warranties of Company herein are correct in all material respects as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date) and (ii) no event has occurred and is continuing that constitutes an Event of Default or an Event of Loss or would constitute an Event of Default or Event of Loss but for the requirement that notice be given or time elapse or both. (g) Each Pass Through Trustee and Loan Trustee shall have received (i) an opinion addressed to it from the General Counsel or an Associate General Counsel of Company (or such other internal counsel to Company as shall be reasonably satisfactory to Pass Through Trustees) substantially in the form set forth in Exhibit A-1 and (ii) opinions addressed to it from Cadwalader, Wickersham & Taft substantially in the forms set forth in Exhibits A-2 and A-3. -4- (h) Each Pass Through Trustee and Loan Trustee shall have received an opinion addressed to it from Bingham McCutchen LLP, special counsel for U.S. Bank, Loan Trustee and Subordination Agent, substantially in the form set forth in Exhibit B. (i) Each Pass Through Trustee and Loan Trustee shall have received an opinion addressed to it from Daugherty, Fowler, Peregrin & Haught, A Professional Corporation, special FAA counsel in Oklahoma City, Oklahoma, substantially in the form set forth in Exhibit C. (j) Each Pass Through Trustee and Loan Trustee shall have received a certificate or certificates signed by the chief financial or accounting officer, any Senior Vice President, the Treasurer, any Vice President or any Assistant Treasurer (or any other Responsible Officer) of Company, dated the Closing Date, certifying as to the correctness of each of the matters stated in Section 3.01(f). (k) Each Pass Through Trustee shall have received a certificate from U.S. Bank in its individual capacity and as Loan Trustee and Subordination Agent, as applicable, dated the Closing Date, signed by an authorized officer of U.S. Bank in its individual capacity and as Loan Trustee and Subordination Agent, as applicable, certifying for each such entity that no Loan Trustee Liens or Other Party Liens attributable to it, as applicable, exist, and further certifying as to the correctness of each of the matters stated in Section 5.01. (l) Each Pass Through Trustee shall have received opinions addressed to it from Milbank, Tweed, Hadley & McCloy LLP, special counsel for Primary Liquidity Provider, substantially in the form set forth in Exhibit D-1, from German in-house counsel for Primary Liquidity Provider, substantially in the form set forth in Exhibit D-2, and from in-house counsel for Above Cap Liquidity Provider substantially in the form set forth in Exhibit D-3. (m) Loan Trustee shall have received an insurance report of an independent insurance broker and the related certificates of insurance, each in form and substance reasonably satisfactory to Loan Trustee, as to the compliance with the terms of Section 7.06 of the Indenture relating to insurance with respect to the Aircraft. (n) No action or proceeding shall have been instituted nor shall governmental action be threatened before any court or governmental agency, nor shall any order, judgment or decree have been issued or proposed to be issued by any court or governmental agency at the time of the Closing to set aside, restrain, enjoin or prevent the completion and consummation of this Agreement or the transactions contemplated hereby. (o) Company shall have entered into the Pass Through Purchase Agreement, the Pass Through Certificates shall have been issued and sold pursuant to the Pass Through Purchase Agreement and the Initial Purchasers shall have transferred to Pass Through Trustees in immediately available funds an amount at least equal to the aggregate purchase price of the Equipment Notes to be purchased from Company. (p) Loan Trustee shall have received an executed copy of the Manufacturer's Consent substantially in the form set forth in Exhibit E. -5- (q) Each Pass Through Trustee shall have received an opinion from in-house counsel to the Policy Provider, substantially in the form set forth in Exhibit G. (r) All appropriate action required to have been taken prior to the Closing Date by the FAA or any governmental or political agency, subdivision or instrumentality of the United States, in connection with the transactions contemplated by this Agreement has been taken, and all orders, permits, waivers, authorizations, exemptions and approvals of such entities required to be in effect on the Closing Date in connection with the transactions contemplated by this Agreement have been issued. Promptly upon the recording of the Indenture (with the Indenture Supplement attached) pursuant to the Transportation Code, Company will cause Daugherty, Fowler, Peregrin & Haught, A Professional Corporation, special FAA counsel in Oklahoma City, Oklahoma to deliver to Subordination Agent, to Pass Through Trustees, to Loan Trustee and to Company an opinion as to the due recording of such instrument and the lack of filing of any intervening documents with respect to the Aircraft. Section 3.02 Conditions Precedent to Obligations of Company. The obligation of Company to issue and sell the Equipment Notes is subject to the fulfillment (or waiver by Company) prior to or on the Closing Date of the following conditions precedent: (a) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it a violation of law or governmental regulations for Company to enter into any transaction contemplated by the Operative Documents or the Pass Through Trust Agreements. (b) The documents referred to in Section 3.01(c) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Company), shall be in full force and effect and executed counterparts (or copies thereof where indicated) thereof shall have been delivered to Company, and Company shall have received such documents and evidence with respect to U.S. Bank, Liquidity Providers, Policy Provider, Loan Trustee, Subordination Agent and each Pass Through Trustee as Company reasonably requests in order to establish the consummation of the transactions contemplated by this Agreement, the taking of all corporate and other proceedings in connection therewith and compliance with the conditions herein set forth. (c) The Indenture (with the Indenture Supplement covering the Aircraft attached) shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the FAA pursuant to the Transportation Code. (d) On the Closing Date, the representations and warranties herein of U.S. Bank, Loan Trustee, Subordination Agent and Pass Through Trustees shall be correct as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall have been correct on and as of such earlier date), and, insofar as such representations and warranties -6- concern U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee, such party shall have so certified to Company. (e) Company shall have received each opinion referred to in Subsections 3.01(h), 3.01(i), 3.01(l) and 3.01(q), each such opinion (other than 3.01(l)) addressed to Company or accompanied by a letter from the counsel rendering such opinion authorizing Company to rely on such opinion as if it were addressed to Company, and the certificates referred to in Subsections 3.01(e)(iv) and 3.01(k). (f) Company shall have received an opinion addressed to it from Bingham McCutchen LLP, special counsel for Pass Through Trustees, substantially in the form set forth in Exhibit F-1 and from Reed Smith LLP, special counsel for Pass Through Trustees, substantially in the form set forth in Exhibit F-2. (g) No action or proceeding shall have been instituted nor shall governmental action be threatened before any court or governmental agency, nor shall any order, judgment or decree have been issued or proposed to be issued by any court or governmental agency at the time of the Closing to set aside, restrain, enjoin or prevent the completion and consummation of this Agreement or the transactions contemplated hereby. (h) Company shall have received a certificate from U.S. Bank dated the Closing Date, signed by an authorized officer of U.S. Bank, certifying for each Pass Through Trustee that no Other Party Liens attributable to it exist and further certifying as to the correctness of each of the matters stated in Section 5.01. (i) Company shall have been paid by Pass Through Trustee for each Pass Through Trust the aggregate original principal amount of the Equipment Notes being issued to such Pass Through Trust as set forth on Schedule I opposite the name of such Pass Through Trust. ARTICLE 4 REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF COMPANY Section 4.01 Representations and Warranties of Company. Company represents and warrants that: (a) Company is a corporation duly incorporated and validly existing in good standing under the laws of the State of Delaware, is a Certificated Air Carrier, is a Citizen of the United States, has the corporate power and authority to own its properties or hold them under lease and to enter into and perform its obligations under the Operative Documents to which it is a party and is duly qualified to do business as a foreign corporation in good standing in each other jurisdiction in which the failure to so qualify would have a material adverse effect on the consolidated financial condition of Company and its subsidiaries, considered as a whole, and its jurisdiction of organization (as such term is used in Article 9 of the Uniform Commercial Code as in effect in the State of Delaware) is Delaware. -7- (b) The execution, delivery and performance by Company of this Agreement and the other Operative Documents to which Company is a party have been duly authorized by all necessary corporate action on the part of Company, do not require any stockholder approval or approval or consent of any trustee or holder of any indebtedness or obligations of Company, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on Company or the certificate of incorporation or by-laws of Company or contravene or result in a breach of, or constitute a default under, or result in the creation of any Lien (other than as permitted under the Indenture) upon the property of Company under, any material indenture, mortgage, contract or other agreement to which Company is a party or by which it or any of its properties may be bound or affected. (c) Neither the execution and delivery by Company of this Agreement and the other Operative Documents to which it is a party, nor the consummation by Company of any of the transactions contemplated hereby or thereby, requires the authorization, consent or approval of, the giving of notice to, the filing or registration with or the taking of any other action in respect of, the Department of Transportation, the FAA or any other federal or state governmental authority or agency, except for (i) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over Company's operation of the Aircraft required to be obtained on or prior to the Closing Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or on the Closing Date will be, in full force and effect, (ii) the filings referred to in Section 4.01(e) (iii) authorizations, consents, approvals, notices and filings required to be obtained, taken, given or made under securities or Blue Sky or similar laws of the various states and foreign jurisdictions and (iv) consents, approvals, notices, registrations and other actions required to be obtained, given, made or taken only after the date hereof. (d) This Agreement and each other Operative Document to which Company is a party have been duly executed and delivered by Company and constitute the legal, valid and binding obligations of Company enforceable against Company in accordance with their terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity and except, in the case of the Indenture, as limited by applicable laws that may affect the remedies provided in the Indenture. (e) Except for (i) the filing for recordation pursuant to the Transportation Code of the Indenture (with the Indenture Supplement covering the Aircraft attached) and (ii) with respect to the security interests created by such documents, the filing of financing statements (and continuation statements at periodic intervals) under the Uniform Commercial Code of Delaware, no further filing or recording of any document is necessary under the laws of the United States or any state thereof as of the Closing Date in order to establish and perfect the security interest in the Aircraft created under the Indenture in favor of Loan Trustee as against Company and any third parties in any applicable jurisdiction in the United States. (f) Company is not an investment company or a company controlled by an investment company within the meaning of the Investment Company Act of 1940, as amended. -8- (g) As of the Closing Date, (i) Company has good title to the Aircraft, free and clear of Liens other than Permitted Liens, (ii) the Aircraft has been duly certificated by the FAA as to type and airworthiness in accordance with the terms of the Indenture, (iii) the Indenture (with the Indenture Supplement covering the Aircraft attached) has been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the FAA pursuant to the Transportation Code and (iv) the Aircraft is duly registered with the FAA in the name of Company. (h) Company holds all licenses, permits and franchises from the appropriate government entities necessary to authorize Company lawfully to engage in air transportation and to carry on scheduled commercial passenger service as currently conducted, except where the failure to so hold any such license, permit or franchise would not have a material adverse effect on the financial condition or operations of Company. (i) Neither Company nor any person authorized to act on its behalf has directly or indirectly offered any beneficial interest or security relating to the ownership of the Aircraft, or any of the Equipment Notes or any other interest in or security under the Indenture, for sale to, or solicited any offer to acquire any such interest or security from, or has sold any such interest or security to, any person in violation of the Securities Act of 1933, as amended. (j) No Person acting on behalf of Company is or will be entitled to any broker's fee, commission or finder's fee in connection with the transactions contemplated hereby, other than the fees and expenses payable by Company in connection with the sale of the Pass Through Certificates on the Closing Date. Section 4.02 General Indemnity. (a) Claims Defined. For the purposes of this Section 4.02, "Claims" means any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs or expenses of whatsoever kind and nature (whether or not on the basis of negligence, strict or absolute liability or liability in tort) that may be imposed on, incurred by, suffered by or asserted against an Indemnitee, as defined below, and, except as otherwise expressly provided in this Section 4.02, includes all reasonable out-of-pocket costs, disbursements and expenses (including reasonable out-of-pocket legal fees and expenses) actually incurred by an Indemnitee in connection therewith or related thereto. (b) Indemnitee Defined. For the purposes of this Section 4.02, "Indemnitee" means (i) U.S. Bank and Loan Trustee, (ii) each separate or additional trustee appointed pursuant to Section 8.02 of the Indenture, (iii) so long as it holds any Equipment Notes as agent and trustee of any Pass Through Trustee, Subordination Agent, (iv) so long as it is the holder of any Equipment Notes, each Pass Through Trustee, (v) Policy Provider and its affiliates and each Liquidity Provider and (vi) each of their respective successors and permitted assigns in such capacities, agents, servants, officers, employees and directors (the respective agents, servants, officers, employees and directors of each of the foregoing Indemnitees, as applicable, together with such Indemnitee and any affiliate of such Indemnitee, being collectively the "Related Indemnitee Group" of such Indemnitee); provided that such Persons, to the extent they are not signatories to this Agreement, have expressly agreed in writing to be bound by the terms of this Section 4.02 prior to, or concurrently with, the making of a Claim. If any Indemnitee fails to comply with any duty or obligation under this Section 4.02 with respect to any Claim, such -9- Indemnitee shall not be entitled to any indemnity with respect to such Claim under this Section 4.02 to the extent such failure was prejudicial to Company. No holder of a Pass Through Certificate in its capacity as such holder shall be an Indemnitee. (c) Claims Indemnified. Subject to the exclusions stated in Subsection 4.02(d), Company agrees to indemnify, protect, defend and hold harmless on an After-Tax Basis each Indemnitee against Claims resulting from or arising out of (a) the Operative Documents or the enforcement of any of the terms of the Operative Documents, (b) the Aircraft, the Airframe, any Engine or any Part, including, without limitation, with respect thereto, (i) the sale, purchase, acceptance, non-acceptance or rejection of the Aircraft under the Purchase Agreement or the ownership, possession, use, non-use, substitution, airworthiness, control, maintenance, repair, operation, registration, re-registration, de-registration, delivery, nondelivery, assignment, abandonment, condition, sale, lease, sublease, storage, modification, alteration, return, transfer or other disposition of the Aircraft, the Airframe, any Engine or any Part (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement) by Company, any Permitted Lessee or any other Person, (ii) tort liability, whether or not arising out of the negligence of any Indemnitee (whether active, passive or imputed), (iii) death or property damage of passengers, shippers or others, (iv) environmental control, noise or pollution, and (c) the offer, sale or delivery of any Equipment Notes, Pass Through Certificates or any interest therein or represented thereby. Without limiting the foregoing and subject to, and without duplication of, the provisions of Section 6.01(a), Company agrees to pay the reasonable ongoing fees, and the reasonable out-of-pocket costs and expenses actually incurred (including, without limitation, reasonable attorney's fees and disbursements actually incurred and, to the extent payable as provided in the Indenture, reasonable compensation and expenses of Loan Trustee's agents actually incurred), of Loan Trustee in connection with the transactions contemplated hereby. (d) Claims Excluded. The following are excluded from Company's agreement to indemnify an Indemnitee under this Section 4.02: (i) any Claim to the extent such Claim is attributable to acts or events occurring after (x) the Lien of the Indenture has been discharged or (y) the transfer of possession of the Aircraft pursuant to Article IV of the Indenture except to the extent that such Claim is attributable to acts occurring in connection with the exercise of remedies pursuant to Section 4.02 of the Indenture following the occurrence and continuance of an Event of Default; (ii) any Claim to the extent such Claim is, or is attributable to, a Tax, except with respect to paying indemnity amounts on an After-Tax Basis; (iii) any Claim to the extent such Claim is attributable to the negligence or willful misconduct of such Indemnitee or such Indemnitee's Related Indemnitee Group; (iv) any Claim to the extent such Claim is attributable to the noncompliance by such Indemnitee or such Indemnitee's Related Indemnitee Group with any of the terms of, or any misrepresentation by an Indemnitee or its Related Indemnitee Group contained in, this Agreement, any other Operative Document or any Pass Through Document to -10- which such Indemnitee or any of such Related Indemnitee Group is a party or any agreement relating hereto or thereto; (v) any Claim to the extent such Claim constitutes a Permitted Lien attributable to such Indemnitee; (vi) any Claim to the extent such Claim is attributable to the offer, sale, assignment, transfer, participation or other disposition (whether voluntary or involuntary) by or on behalf of such Indemnitee or its Related Indemnitee Group (other than during the occurrence and continuance of an Event of Default provided that any such offer, sale, assignment, transfer, participation or other disposition during the occurrence and continuation of an Event of Default shall not be subject to indemnification unless it is made in accordance with the Indenture and applicable law) of any Equipment Note or interest therein or Pass Through Certificate, all or any part of such Indemnitee's interest in the Operative Documents or the Pass Through Documents or any interest in the Collateral or any similar security; (vii) any Claim to the extent such Claim is attributable to (A) a failure on the part of Loan Trustee to distribute in accordance with this Agreement or the Indenture any amounts received and distributable by it hereunder or thereunder, (B) a failure on the part of Subordination Agent to distribute in accordance with the Intercreditor Agreement any amounts received and distributable by it thereunder or (C) a failure on the part of any Pass Through Trustee to distribute in accordance with the Pass Through Trust Agreement to which it is a party any amounts received and distributable by it thereunder; (viii) any Claim to the extent such Claim is attributable to the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any Operative Document or any Pass Through Document, other than such as have been requested by Company or that occur as the result of an Event of Default, or such as are expressly required or contemplated by the provisions of the Operative Documents or the Pass Through Documents; (ix) any Claim to the extent such Claim is payable or borne by (a) Company pursuant to any indemnification, compensation or reimbursement provision of any other Operative Document or any Pass Through Document or (b) a Person other than Company pursuant to any provision of any Operative Document or any Pass Through Document; (x) any Claim to the extent such Claim is an ordinary and usual operating or overhead expense or not an out-of-pocket expense actually incurred; (xi) any Claim to the extent such Claim is incurred on account of or asserted as a result of any "prohibited transaction" within the meaning of Section 406 of ERISA or Section 4975 of the Code; (xii) any Claim to the extent such Claim is attributable to one or more of the other aircraft financed through the offering of Pass Through Certificates (in the event of doubt, any Claim shall be allocated between the Aircraft and such other aircraft in the same proportion that the then outstanding Equipment Notes bear to the then outstanding -11- equipment notes issued with respect to the other aircraft and held by Pass Through Trustees); (xiii) any Claim by an Indemnitee related to the status of such Indemnitee as a passenger or shipper on any of Company's aircraft or as a party to a marketing or promotional or other commercial agreement with Company unrelated to the transactions contemplated by the Operative Documents; and (xiv) any Claim to the extent such Claim is attributable to the offer or sale by an Indemnitee (or any member of such Indemnitee's Related Indemnitee Group) of any interest in the Aircraft, the Equipment Notes, the Pass Through Certificates, or any similar interest, in violation of the Securities Act of 1933, as amended, or other applicable federal, state or foreign securities laws (other than any thereof caused by acts or omissions of Company of any of its affiliates). (e) Insured Claims. In the case of any Claim indemnified by Company hereunder that is covered by a policy of insurance maintained by Company, each Indemnitee agrees to cooperate, at Company's expense, with the insurers in the exercise of their rights to investigate, defend and compromise such Claim. (f) Claims Procedure. An Indemnitee shall promptly notify Company of any Claim as to which indemnification is sought. The failure to provide such prompt notice shall not release Company from any of its obligations to indemnify hereunder except to the extent that Company is prejudiced by such failure or Company's indemnification obligations are increased as a result of such failure (in which event Company shall not be responsible for such additional indemnification obligations). Such Indemnitee shall promptly submit to Company all additional information in such Indemnitee's possession to substantiate such Claim as Company reasonably requests. Subject to the rights of Company's insurers, Company may, at its sole cost and expense, investigate any Claim, and may in its sole discretion defend or compromise any Claim. At Company's expense, any Indemnitee shall cooperate with all reasonable requests of Company in connection therewith. Such Indemnitee shall not enter into a settlement or other compromise with respect to any Claim without the prior written consent of Company, which consent shall not be unreasonably withheld or delayed, unless such Indemnitee waives its right to be indemnified with respect to such Claim. Where Company or its insurers undertake the defense of an Indemnitee with respect to a Claim, no additional legal fees or expenses of such Indemnitee in connection with the defense of such Claim shall be indemnified hereunder unless such fees or expenses were incurred at the written request of Company or such insurers. Subject to the requirements of any policy of insurance, an Indemnitee may participate at its own expense in any judicial proceeding controlled by Company pursuant to the preceding provisions; provided that such party's participation does not, in the opinion of outside counsel appointed by Company or its insurers to conduct such proceedings, interfere with such control. Such participation shall not constitute a waiver of the indemnification provided in this Section 4.02. Notwithstanding anything to the contrary contained herein, Company shall not under any circumstances be liable for the fees and expenses of more than one counsel for all Indemnitees with respect to any one Claim. Notwithstanding anything to the contrary contained herein, an Indemnitee shall not under any circumstances be required or deemed to be required to contest any Claim or to assume responsibility for or control of any judicial proceeding with respect thereto. Company will -12- provide the relevant Indemnitee with such information not within the control of such Indemnitee, as is in Company's control or is reasonably available to Company, which such Indemnitee may reasonably request and will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to fulfill its obligations under this Section. (g) Subrogation. To the extent that a Claim is in fact paid in full by Company or its insurer, Company or such insurer (as the case may be) shall, without any further action, be subrogated to the rights and remedies of the Indemnitee on whose behalf such Claim was paid with respect to the transaction or event giving rise to such Claim. Such Indemnitee shall give such further assurances or agreements and shall cooperate with Company or such insurer, as the case may be, to permit Company or such insurer to pursue such rights and remedies, if any, to the extent reasonably requested by Company. So long as no Event of Default has occurred and is continuing, if an Indemnitee receives any payment, in whole or in part, from any party other than Company or its insurers with respect to any Claim paid by Company or its insurers, it shall promptly pay over to Company the amount received (but not an amount in excess of the amount Company or any of its insurers has paid in respect of such Claim). Any amount referred to in the preceding sentence that is payable to Company shall not be paid to Company, or, if it has been previously paid directly to Company, shall not be retained by Company, if at the time of such payment an Event of Default has occurred and is continuing, but shall be paid to and held by Loan Trustee as security for the obligations of Company under the Operative Documents. If Company agrees, such amount payable shall be applied against Company's obligations thereunder when and as they become due and payable. At such time as such Event of Default is no longer continuing, such amount, to the extent not previously so applied against Company's obligations, shall be paid to Company. (h) No Guaranty. Nothing set forth in this Section 4.02 constitutes a guarantee by Company that the Aircraft at any time will have any particular value, useful life or residual value. (i) Payments; Interest. Any amount payable to any Indemnitee on account of a Claim shall be paid within 30 days after receipt by Company of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the Claims that are the subject of and basis for such indemnity and the computation of the amount payable. Any payments made pursuant to this Section 4.02 directly to an Indemnitee or to Company, as the case may be, shall be made in immediately available funds at such bank or to such account as is specified by the payee in written directions to the payor or, if no such directions are given, by check of the payor payable to the order of the payee and mailed to the payee by certified mail, return receipt requested, postage prepaid to its address referred to in Section 7.01. To the extent permitted by applicable law, interest at the Past Due Rate shall be paid, on demand, on any amount or indemnity not paid when due pursuant to this Section 4.02 until the same is paid. Such interest shall be paid in the same manner as the unpaid amount in respect of which such interest is due. (j) Tax deduction or credit. If, by reason of any Claim payment made to or for the account of an Indemnitee by Company pursuant to this Section 4.02, such Indemnitee subsequently realizes a tax deduction or credit not previously taken into account in computing such payment, such Indemnitee shall promptly pay to Company, but only if Company has made -13- all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (1) the actual reduction in Taxes realized by such Indemnitee which such Indemnitee determines in its good faith judgment is attributable to such deduction or credit, and (2) the actual reduction in Taxes realized by such Indemnitee as such Indemnitee determines in its good faith judgement is a result of any payment made by such Indemnitee pursuant to this sentence; provided that the amount payable by such Indemnitee pursuant to this sentence shall not exceed the sum of the amounts previously paid by Company in order to indemnify such Claim on an After-Tax Basis. If such tax benefit is subsequently disallowed or lost, upon written notice from the Indemnitee, the Company shall repay all amounts paid to it pursuant to this Section 4.2(j) in respect of such disallowed or lost tax benefits. ARTICLE 5 REPRESENTATIONS, WARRANTIES AND COVENANTS OF U.S. BANK Section 5.01 Representations, Warranties and Covenants of U.S. Bank. U.S. Bank, generally, and each of Loan Trustee, Subordination Agent and Pass Through Trustee as it relates to it, represents, warrants and covenants that: (a) U.S. Bank is a national banking association duly organized and validly existing in good standing under the laws of the United States, is eligible to be Loan Trustee under Section 8.01(a) of the Indenture, will promptly comply with Section 8.01(a) of the Indenture and has full power, authority and legal right to enter into and perform its obligations under each of the Operative Documents and the Pass Through Documents to which U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee is a party and, in its capacity as Loan Trustee and Pass Through Trustee, respectively, to authenticate the Equipment Notes and the Pass Through Certificates, respectively. U.S. Bank is qualified to act as Loan Trustee under Section 8.01(c) of the Indenture. (b) The execution, delivery and performance by U.S. Bank, individually or in its capacity as Loan Trustee, Subordination Agent or Pass Through Trustee, as the case may be, of this Agreement, each of the other Operative Documents and each of the Pass Through Documents to which U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee is a party, and the authentication of the Equipment Notes and the Pass Through Certificates, respectively, to be delivered on the Closing Date, have been duly authorized by all necessary action on the part of U.S. Bank, Loan Trustee, Subordination Agent and each Pass Through Trustee, as the case may be, and do not violate any law or regulation of the United States or of the state of the United States in which U.S. Bank is located and which governs the banking and trust powers of U.S. Bank or any order, writ, judgment or decree of any court, arbitrator or governmental authority applicable to U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee or any of their assets, will not violate any provision of the articles of association or by-laws of U.S. Bank and will not violate any provision of, or constitute a default under, any mortgage, indenture, contract, agreement or undertaking to which any of U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee is a party or by which any of them or their respective properties may be bound or affected. -14- (c) Neither the execution and delivery by U.S. Bank, individually or in its capacity as Loan Trustee, Subordination Agent or Pass Through Trustee, as the case may be, of this Agreement, any other Operative Document or any Pass Through Document to which U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee is a party, nor the consummation by U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the authorization, consent or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, (i) any governmental authority or agency of the United States or the state of the United States where U.S. Bank is located and regulating the banking and trust powers of U.S. Bank and (ii) any trustee or other holder of any debt of U.S. Bank. (d) This Agreement, each other Operative Document and each Pass Through Document to which U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee is a party have been duly executed and delivered by U.S. Bank, individually and in its capacity as Loan Trustee, Subordination Agent or Pass Through Trustee, as the case may be, and constitute the legal, valid and binding obligations of U.S. Bank, Loan Trustee, Subordination Agent and such Pass Through Trustee, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity. (e) It unconditionally agrees with and for the benefit of the parties to this Agreement that it will not directly or indirectly create, incur, assume or suffer to exist any Loan Trustee Lien or Other Party Lien attributable to it, and it agrees that it will, at its own cost and expense, promptly take such action as may be necessary to discharge and satisfy in full any such Lien; and it shall indemnify, protect, defend and hold harmless each Indemnitee and Company against Claims in any way resulting from or arising out of a breach by it of its obligations under this Section 5.01(e). (f) The Equipment Notes to be issued to Subordination Agent pursuant hereto are being acquired by it to be held under the Intercreditor Agreement. (g) Each of U.S. Bank, Loan Trustee, Subordination Agent and each Pass Through Trustee agrees that it will not impose any lifting charge, cable charge, remittance charge or any other charge or fee on any transfer by Company of funds to, through or by U.S. Bank, Loan Trustee, Subordination Agent or such Pass Through Trustee pursuant to this Agreement, any other Operative Document or any Pass Through Document, except as may be otherwise agreed to in writing by Company. (h) Each of U.S. Bank, Loan Trustee, Subordination Agent and any Pass Through Trustee agrees to be bound by the terms of Section 10.16 of the Indenture. (i) There are no Taxes payable by U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee imposed by the State of Connecticut, the State of Delaware or any political subdivision or taxing authority of either thereof in connection with the execution, delivery or performance by U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee of any Operative Document or any Pass Through Document (other than franchise or -15- other taxes based on or measured by any fees or compensation received by any such Person for services rendered in connection with the transactions contemplated by the Operative Documents or the Pass Through Documents), and there are no Taxes payable by any Pass Through Trustee imposed by the State of Connecticut, the State of Delaware or any political subdivision of either thereof in connection with the acquisition, possession or ownership by such Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by such Pass Through Trustee for services rendered in connection with the transactions contemplated by the Operative Documents or the Pass Through Documents) and, assuming that the Pass Through Trusts will not be taxable for Federal income tax purposes as corporations, but, rather, will be characterized for such purposes as grantor trusts or partnerships, the Pass Through Trusts will not be subject to any Taxes imposed by the State of Connecticut, the State of Delaware or any political subdivision of either thereof. (j) Except with the consent of Company, which shall not be unreasonably withheld, U.S. Bank will act as Pass Through Trustee solely through its offices within the State of Connecticut, except for such services that may be performed for it by various agents, but not directly by it, in other states. (k) There are no pending or, to its knowledge, threatened actions or proceedings against U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee to perform its obligations under any Operative Document or any Pass Through Document. (l) The representations and warranties contained in Section 7.15 of each Pass Through Trust Agreement are true, complete and correct as of the Closing Date. ARTICLE 6 OTHER COVENANTS AND AGREEMENTS Section 6.01 Other Agreements. (a) Company agrees promptly to pay (without duplication of any other obligation Company may have to pay such amounts) (A) the initial and annual fees and (to the extent Loan Trustee is entitled to be reimbursed for its reasonable expenses) the reasonable expenses of Loan Trustee in connection with the transactions contemplated hereby and (B) the following expenses incurred by Loan Trustee, Subordination Agent and Pass Through Trustees in connection with the negotiation, preparation, execution and delivery of this Agreement, the other Operative Documents and the other documents or instruments referred to herein or therein: (i) the reasonable fees, expenses and disbursements of (x) Bingham McCutchen LLP, special counsel for Loan Trustee, Subordination Agent and Pass Through Trustees and (y) Daugherty, Fowler, Peregrin & Haught, A Professional Corporation, special FAA counsel in Oklahoma City, Oklahoma, in each case to the extent actually incurred; and -16- (ii) all reasonable expenses incurred in connection with printing and document production or reproduction expenses, and in connection with the filing of Uniform Commercial Code financing statements. (b) Loan Trustee, Noteholders, Subordination Agent and each Pass Through Trustee agree to execute and deliver, at Company's expense, all such documents as Company reasonably requests for the purpose of continuing the registration of the Aircraft at the FAA in Company's name. In addition, each of Loan Trustee, Subordination Agent, each Pass Through Trustee and any other Noteholder agrees, for the benefit of Company, to cooperate with Company in effecting any foreign registration of the Aircraft pursuant to Section 7.02(e) of the Indenture; provided that prior to any such change in the country of registry of the Aircraft the conditions set forth in Section 7.02(e) of the Indenture are met to the reasonable satisfaction of, or waived by, Loan Trustee. (c) Each of U.S. Bank, Loan Trustee, Subordination Agent, each Pass Through Trustee and any other Noteholder agrees that, unless an Event of Default shall have occurred and be continuing, it shall not take any action contrary to, or otherwise in any way interfere with or disturb (and then only in accordance with the Indenture), the quiet enjoyment of the use and possession of the Aircraft, the Airframe, any Engine or any Part by Company or any transferee of any interest in any thereof permitted under the Indenture. (d) Each Noteholder, including, without limitation, Subordination Agent and each Pass Through Trustee, unconditionally agrees with and for the benefit of the parties to this Agreement that it will not directly or indirectly create, incur, assume or suffer to exist any Noteholder Liens, and such Noteholder agrees that it will, at its own cost and expense, promptly take such action as may be necessary to discharge and satisfy in full any such Noteholder Lien; and each Noteholder hereby agrees to indemnify, protect, defend and hold harmless each Indemnitee and Company against Claims in any way resulting from or arising out of a breach by it of its obligations under this Section 6.01(d). (e) By its acceptance of its Equipment Notes, each Noteholder (i) unconditionally agrees for the benefit of Company and Loan Trustee to be bound by and to perform and comply with all of the terms of such Equipment Notes, the Indenture and this Agreement applicable to such Noteholder and (ii) agrees that it will not transfer any Equipment Note (or any part thereof) to any entity unless such entity makes (or is deemed to have made) a representation and warranty as of the date of transfer that either no part of the funds to be used by it for the purchase and holding of such Equipment Note (or any part thereof) constitutes assets of any "employee benefit plan" or that such purchase and holding will not result in a non-exempt prohibited transaction under Section 4975 of the Code and Section 406 of ERISA. (f) Each of Company, Loan Trustee, each Pass Through Trustee and Subordination Agent covenants that (i) until one year and one day after the Series G Equipment Notes have been paid in full, it shall not acquiesce, petition or otherwise invoke or cause or join in invoking or causing the Class G Pass Through Trust or any other Person to invoke the process of any governmental authority for the purpose of commencing or sustaining a case (whether voluntary or not) against the Class G Pass Through Trust under any bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other -17- similar official of the Class G Pass Through Trust or any substantial part of its property or ordering the winding-up or liquidation of the affairs of the Class G Pass Through Trust, (ii) until one year and one day after the Series C Equipment Notes have been paid in full, it shall not acquiesce, petition or otherwise invoke or cause or join in invoking or causing the Class C Pass Through Trust or any other Person to invoke the process of any governmental authority for the purpose of commencing or sustaining a case (whether voluntary or not) against the Class C Pass Through Trust under any bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Class C Pass Through Trust or any substantial part of its property or ordering the winding-up or liquidation of the affairs of the Class C Pass Through Trust and (iii) until one year and one day after the Series D Equipment Notes have been paid in full, it shall not acquiesce, petition or otherwise invoke or cause or join in invoking or causing the Class D Pass Through Trust or any other Person to invoke the process of any governmental authority for the purpose of commencing or sustaining a case (whether voluntary or not) against the Class D Pass Through Trust under any bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Class D Pass Through Trust or any substantial part of its property or ordering the winding-up or liquidation of the affairs of the Class D Pass Through Trust. Section 6.02 Certain Covenants of Company. Company covenants and agrees with Loan Trustee as follows: (a) On and after the Closing, Company will cause to be done, executed, acknowledged and delivered such further acts, conveyances and assurances as Loan Trustee reasonably requests for accomplishing the purposes of this Agreement and the other Operative Documents; provided that any instrument or other document so executed by Company will not expand any obligations or limit any rights of Company in respect of the transactions contemplated by the Operative Documents. (b) Company, at its expense, will cause the Indenture (with the Indenture Supplement covering the Aircraft attached) to be promptly filed and recorded, or filed for recording, with the FAA to the extent permitted under the Transportation Code and the rules and regulations of the FAA thereunder. (c) Company, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Indenture and any financing statements or other instruments as are necessary to maintain, so long as the Indenture is in effect, the perfection of the security interests created by the Indenture or will furnish Loan Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable Loan Trustee to take such action. In addition, Company will pay any and all recording, stamp and other similar taxes payable in the United States, and in any other jurisdiction where the Aircraft is registered, in connection with the execution, delivery, recording, filing, re-recording and refiling of the Indenture or any such financing statements or other instruments. Company will notify Loan Trustee of any change in its jurisdiction of organization (as such term is used in Article 9 of the Uniform Commercial Code as in effect in the State of Delaware) promptly after making such change or in any event -18- within the period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. (d) Company shall at all times maintain its corporate existence except as permitted by Subsection 6.02(e). (e) Company shall not consolidate with or merge into any other Person or convey, transfer or lease substantially all of its assets as an entirety to any Person, unless: (i) the successor or transferee entity shall, if and to the extent required under Section 1110 in order that Loan Trustee continues to be entitled to any benefits of Section 1110 with respect to the Aircraft, be a Citizen of the United States and a Certificated Air Carrier and shall execute and deliver to Loan Trustee an agreement containing the express assumption by such successor or transferee entity of the due and punctual performance and observance of each covenant and condition of the Operative Documents to which Company is a party to be performed or observed by Company; (ii) if the Aircraft is, at the time, registered with the FAA, such Person makes such filings and recordings with the FAA pursuant to the Act, or if the Aircraft is, at the time, not registered with the FAA, such Person makes such filings and recordings with the applicable aviation authority, as are necessary to evidence such consolidation, merger conveyance, transfer or lease; (iii) immediately after giving effect to such transaction, no Event of Default shall have occurred and be continuing; and (iv) Company shall deliver to Policy Provider and Loan Trustee a certificate signed by a Responsible Officer of Company, and an opinion of counsel (which may be the general counsel, a deputy general counsel or an associate general counsel to Company), each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (i) above comply with this Subsection 6.02(e) and that all conditions precedent herein relating to such transaction have been complied with (except that such opinion need not cover the matters referred to in clause (iii) above and may rely, as to factual matters, on a certificate of an officer of Company) and, in the case of such opinion, that such assumption agreement has been duly authorized, executed and delivered by such successor Person and is enforceable against such successor Person in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of Company as an entirety in accordance with this Subsection 6.02(e), the successor Person formed by such consolidation or into which Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, Company under this Agreement and the other Operative Documents with the same effect as if such successor Person had been named as Company herein. -19- (f) Company shall remain a Certificated Air Carrier for as long as and to the extent required under Section 1110 in order that Loan Trustee shall be entitled to any of the benefits of Section 1110 with respect to the Aircraft. ARTICLE 7 MISCELLANEOUS Section 7.01 Notices. Unless otherwise expressly specified or permitted by the terms hereof, all notices required or permitted under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by registered or certified United States mail, courier service or facsimile or any other customary means of communication, and any such notice shall be effective when delivered (or, if delivered by facsimile, upon completion of transmission and confirmation by the sender (by a telephone call to a representative of the recipient or by machine confirmation) that such transmission was received) addressed as follows: if to Company, addressed to: Delta Air Lines, Inc. 1030 Delta Boulevard Atlanta, Georgia 30320 Attention: Treasurer, Dept. 856 Telephone: (404) 714-1724 Facsimile: (404) 715-4862 with a copy to the General Counsel at the same address, but Dept. 971 Telephone: (404) 715-2387 Facsimile: (404) 733-1657 if to U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee, addressed to: U.S. Bank Trust National Association 225 Asylum Street Goodwin Square Hartford, Connecticut 06103 Attention: Corporate Trust Division Telephone: (860) 244-1844 Facsimile: (860) 244-1881 or if to any subsequent Noteholder, addressed to such Noteholder at its address set forth in the Equipment Note Register maintained pursuant to Section 2.07 of the Indenture. -20- Any party, by notice to the other parties hereto, may designate different addresses for subsequent notices or communications. Whenever the words "notice" or "notify" or similar words are used herein, they mean the provision of formal notice as set forth in this Section 7.01. Section 7.02 Survival of Representations, Warranties, Indemnities, Covenants and Agreements. Except as otherwise provided herein, the representations, warranties, indemnities, covenants and agreements of Company, U.S. Bank, Loan Trustee, Subordination Agent, each Pass Through Trustee and Noteholders herein, and each of their obligations hereunder, shall survive the making of the loans, the transfer of any interest by any Noteholder of its Equipment Note and the expiration or termination (to the extent arising out of acts or events occurring prior to such expiration) of any Operative Documents. SECTION 7.03 GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 7.04 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 7.05 No Oral Modifications or Continuing Waivers; Consents. Subject to Section 9.03 of the Indenture, no terms or provisions of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which the enforcement of the change, waiver, discharge or termination is sought. No such change, waiver, discharge or termination shall be effective unless a signed copy thereof is delivered to Loan Trustee. Each Pass Through Trustee and, by its acceptance of an Equipment Note, each subsequent Noteholder covenants and agrees that it shall not unreasonably withhold its consent to any consent of Loan Trustee requested by Company under the Indenture. Section 7.06 Effect of Headings and Table of Contents. The headings of the various Articles and Sections herein and in the Table of Contents are for convenience of reference only and do not define or limit any of the terms or provisions hereof. Section 7.07 Successors and Assigns. All covenants, agreements, representations and warranties in this Agreement by Company, by U.S. Bank, individually or as Loan Trustee, Subordination Agent or Pass Through Trustee, or by any Noteholder, shall bind and inure to the benefit of and be enforceable by Company, and subject to the terms of Section 6.02(e), its successors and permitted assigns, each Pass Through Trustee and any successor or other trustee under the Pass Through Trust Agreement to which it is a party, Subordination Agent and its successor under the Intercreditor Agreement and Loan Trustee and its successor under the Indenture, whether so expressed or not. -21- Section 7.08 Benefits of Agreement. Subject to the next sentence, nothing in this Agreement, express or implied, gives to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Agreement, except as expressly provided herein. Company agrees and acknowledges that each Liquidity Provider, Policy Provider and each separate or additional trustee appointed pursuant to Section 8.02 of the Indenture shall be third party beneficiaries of the covenants and agreements of Company with respect to the indemnities contained in Section 4.02 and may rely on the covenants and agreements of Company with respect to such indemnities to the same extent as if the covenants and agreements of Company with respect to such indemnities were made to each Liquidity Provider and Policy Provider directly (and in addition Policy Provider shall be a third party beneficiary of the covenants and agreements in its favor contained in Section 6.02(e)(iv) and may rely on such covenants and agreements to the same extent as if such covenants and agreements were made to Policy Provider directly). Section 7.09 Counterparts. This Agreement may be executed in any number of counterparts. Each of the parties hereto shall not be required to execute the same counterpart. Each counterpart of this Agreement including a signature page or pages executed by each of the parties hereto shall be an original counterpart of this Agreement, but all of such counterparts shall together constitute one instrument. Section 7.10 Submission to Jurisdiction. Each of the parties hereto, to the extent it may do so under applicable law, for purposes hereof and of all other Operative Documents hereby (a) irrevocably submits itself to the non-exclusive jurisdiction of the courts of the State of New York sitting in the City of New York and to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto, or their successors or permitted assigns and (b) waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by such courts. -22- IN WITNESS WHEREOF, the parties hereto have caused this Participation Agreement to be duly executed by their respective officers thereunto duly authorized as of the date first above written. DELTA AIR LINES, INC. By: -------------------------------------- Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Pass Through Trustee under each of the Pass Through Trust Agreements By: -------------------------------------- Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Subordination Agent By: -------------------------------------- Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Loan Trustee By: -------------------------------------- Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, in its individual capacity as set forth herein By: -------------------------------------- Name: Title: SCHEDULE I to PARTICIPATION AGREEMENT EQUIPMENT NOTES, PURCHASERS AND ORIGINAL PRINCIPAL AMOUNTS
DESCRIPTION OF ORIGINAL PRINCIPAL PURCHASER EQUIPMENT NOTES MATURITY AMOUNT --------- --------------- -------- ----------------- Delta Air Lines Pass Series 2003-1G Equipment January 25, 2008 $21,917,485.13 Through Trust 2003-1G Note EN-1G-001 Delta Air Lines Pass Series 2003-1C Equipment January 25, 2008 $ 8,325,376.09 Through Trust 2003-1C Note EN-1C-001 Delta Air Lines Pass Series 2003-1D Equipment January 25, 2008 $ 2,883,344.43 Through Trust 2003-1D Note EN-1D-001
I-1 SCHEDULE II to PARTICIPATION AGREEMENT TRUST SUPPLEMENTS Trust Supplement No. 2003-1G, dated as of January 30, 2003, between Company and Pass Through Trustee in respect of Delta Air Lines Pass Through Trust 2003-1G. Trust Supplement No. 2003-1C, dated as of January 30, 2003, between Company and Pass Through Trustee in respect of Delta Air Lines Pass Through Trust 2003-1C. Trust Supplement No. 2003-1D, dated as of January 30, 2003, between Company and Pass Through Trustee in respect of Delta Air Lines Pass Through Trust 2003-1D. II-1 SCHEDULE III to PARTICIPATION AGREEMENT EXCESS AMOUNT
Date Excess Amount --------- ------------- 30-Jan-03 $4,968,931 25-Apr-03 $4,968,931 25-Jul-03 $4,968,931 25-Oct-03 $4,968,931 25-Jan-04 $4,719,830 25-Apr-04 $4,719,830 25-Jul-04 $4,719,830 25-Oct-04 $4,719,830 25-Jan-05 $4,296,408 25-Apr-05 $4,296,408 25-Jul-05 $4,296,408 25-Oct-05 $4,296,408 25-Jan-06 $4,065,135 25-Apr-06 $4,065,135 25-Jul-06 $4,065,135 25-Oct-06 $4,065,135 25-Jan-07 $3,671,427 25-Apr-07 $3,671,427 25-Jul-07 $3,671,427 25-Oct-07 $3,671,427 25-Jan-08 $ 0
III-1 EXHIBIT A-1 to PARTICIPATION AGREEMENT FORM OF OPINION OF COUNSEL FOR COMPANY [Intentionally Omitted] A-1-1 EXHIBIT A-2 to PARTICIPATION AGREEMENT FORM OF OPINION OF SPECIAL COUNSEL FOR COMPANY [Intentionally Omitted] A-2-1 EXHIBIT A-3 to PARTICIPATION AGREEMENT FORM OF ss. 1110 OPINION OF SPECIAL COUNSEL FOR COMPANY [Intentionally Omitted] A-3-1 EXHIBIT B to PARTICIPATION AGREEMENT FORM OF OPINION OF SPECIAL COUNSEL FOR LOAN TRUSTEE, SUBORDINATION AGENT AND U.S. BANK [Intentionally Omitted] B-1 EXHIBIT C to PARTICIPATION AGREEMENT FORM OF OPINION OF SPECIAL FAA COUNSEL [Intentionally Omitted] C-1 EXHIBIT D-1 to PARTICIPATION AGREEMENT FORM OF OPINION OF SPECIAL COUNSEL FOR PRIMARY LIQUIDITY PROVIDER [Intentionally Omitted] D-1-1 EXHIBIT D-2 to PARTICIPATION AGREEMENT FORM OF OPINION OF GERMAN IN-HOUSE COUNSEL FOR PRIMARY LIQUIDITY PROVIDER [Intentionally Omitted] D-2-1 EXHIBIT D-3 to PARTICIPATION AGREEMENT FORM OF OPINION OF IN-HOUSE COUNSEL FOR ABOVE-CAP LIQUIDITY PROVIDER [Intentionally Omitted] D-3-1 EXHIBIT E to PARTICIPATION AGREEMENT FORM OF MANUFACTURER'S CONSENT [Intentionally Omitted] E-1 EXHIBIT F-1 TO PARTICIPATION AGREEMENT FORM OF OPINION SPECIAL COUNSEL FOR PASS THROUGH TRUSTEES [Intentionally Omitted] F-1-1 EXHIBIT F-2 TO PARTICIPATION AGREEMENT FORM OF OPINION SPECIAL COUNSEL FOR PASS THROUGH TRUSTEES [INTENTIONALLY OMITTED] F-2-1 EXHIBIT G TO PARTICIPATION AGREEMENT FORM OF OPINION OF IN-HOUSE COUNSEL FOR POLICY PROVIDER [INTENTIONALLY OMITTED] G-1 EX-4.9 10 g83137exv4w9.txt INDENTURE AND SECURITY AGREEMENT (N3760C) EXHIBIT 4.9 ================================================================================ INDENTURE AND SECURITY AGREEMENT (N3760C) Dated as of January 30, 2003 between DELTA AIR LINES, INC., and U.S. BANK TRUST NATIONAL ASSOCIATION, as Loan Trustee ---------------------------------- One Boeing 737-832 Aircraft U.S. Registration No. N3760C ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS Section 1.01 Definitions............................................................................. 4 Section 1.02 Other Definitional Provisions........................................................... 4 ARTICLE II THE EQUIPMENT NOTES Section 2.01 Form of Equipment Notes................................................................. 5 Section 2.02 Issuance and Terms of Equipment Notes................................................... 9 Section 2.03 Method of Payment...................................................................... 10 Section 2.04 Withholding Taxes...................................................................... 11 Section 2.05 Application of Payments................................................................ 11 Section 2.06 Termination of Interest in Collateral.................................................. 11 Section 2.07 Registration, Transfer and Exchange of Equipment Notes................................. 12 Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment Notes................................... 13 Section 2.09 Payment of Expenses on Transfer; Cancellation.......................................... 13 Section 2.10 Mandatory Redemption of Equipment Notes................................................ 13 Section 2.11 Voluntary Redemption of Equipment Notes................................................ 14 Section 2.12 Redemptions; Notice of Redemptions; Repurchases........................................ 14 Section 2.13 Subordination.......................................................................... 15 Section 2.14 Certain Payments....................................................................... 15 Section 2.15 Repayment of Monies for Equipment Note Payments Held by Loan Trustee................... 16 Section 2.16 Directions by Subordination Agent...................................................... 17 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE COLLATERAL Section 3.01 Basic Distributions.................................................................... 17 Section 3.02 Event of Loss; Optional Redemption..................................................... 18 Section 3.03 Payments after Event of Default........................................................ 20 Section 3.04 Certain Payments....................................................................... 22 Section 3.05 Payments to Company.................................................................... 23 Section 3.06 Cooperation. .......................................................................... 23
-i- ARTICLE IV EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE Section 4.01 Events of Default...................................................................... 23 Section 4.02 Remedies............................................................................... 25 Section 4.03 Remedies Cumulative.................................................................... 28 Section 4.04 Discontinuance of Proceedings.......................................................... 28 Section 4.05 Waiver of Past Defaults................................................................ 28 Section 4.06 Noteholders May Not Bring Suit Except Under Certain Conditions......................... 28 Section 4.07 Appointment of a Receiver.............................................................. 29 Section 4.08 Rights of Noteholders to Receive Payment............................................... 29 ARTICLE V DUTIES OF LOAN TRUSTEE Section 5.01 Notice of Event of Default............................................................. 29 Section 5.02 Action upon Instructions; Certain Rights and Limitations............................... 30 Section 5.03 Indemnification........................................................................ 30 Section 5.04 No Duties Except as Specified in Indenture or Instructions............................. 31 Section 5.05 No Action Except under Indenture or Instructions....................................... 31 Section 5.06 Investment of Amounts Held by Loan Trustee............................................. 31 ARTICLE VI LOAN TRUSTEE Section 6.01 Acceptance of Trusts and Duties........................................................ 32 Section 6.02 Absence of Certain Duties.............................................................. 32 Section 6.03 No Representations or Warranties as to the Documents................................... 32 Section 6.04 No Segregation of Monies; No Interest.................................................. 32 Section 6.05 Reliance; Agents; Advice of Counsel.................................................... 33 Section 6.06 Instructions from Noteholders.......................................................... 33 ARTICLE VII OPERATING COVENANTS OF COMPANY Section 7.01 Liens.................................................................................. 33 Section 7.02 Possession, Operation and Use, Maintenance and Registration............................ 34 Section 7.03 Inspection; Financial Information...................................................... 40 Section 7.04 Replacement and Pooling of Parts; Alterations, Modifications and Additions; Substitution of Engines............................................................... 41 Section 7.05 Loss, Destruction or Requisition....................................................... 43 Section 7.06 Insurance.............................................................................. 47
-ii- ARTICLE VIII SUCCESSOR AND ADDITIONAL TRUSTEES Section 8.01 Resignation or Removal; Appointment of Successor....................................... 52 Section 8.02 Appointment of Additional and Separate Trustees........................................ 53 ARTICLE IX AMENDMENTS AND WAIVERS Section 9.01 Amendments to this Indenture without Consent of Holders................................ 55 Section 9.02 Amendments to this Indenture with Consent of Holders................................... 55 Section 9.03 Amendments, Waivers, Etc. of the Participation Agreement............................... 56 Section 9.04 Revocation and Effect of Consents...................................................... 57 Section 9.05 Notation on or Exchange of Equipment Notes............................................. 57 Section 9.06 Trustee Protected...................................................................... 57 ARTICLE X MISCELLANEOUS Section 10.01 Termination of Indenture............................................................... 57 Section 10.02 No Legal Title to Collateral in Noteholders............................................ 58 Section 10.03 Sale of Aircraft by Loan Trustee is Binding............................................ 58 Section 10.04 Indenture for Benefit of Company, Loan Trustee and Noteholders......................... 58 Section 10.05 Notices................................................................................ 59 Section 10.06 Severability........................................................................... 59 Section 10.07 No Oral Modification or Continuing Waivers............................................. 60 Section 10.08 Successors and Assigns................................................................. 60 Section 10.09 Headings............................................................................... 60 Section 10.10 Normal Commercial Relations............................................................ 60 Section 10.11 Voting by Noteholders.................................................................. 60 Section 10.12 Section 1110........................................................................... 60 Section 10.13 Company's Performance and Rights....................................................... 60 Section 10.14 Counterparts........................................................................... 61 Section 10.15 Governing Law.......................................................................... 61 Section 10.16 Confidential Information............................................................... 61 Section 10.17 Submission to Jurisdiction............................................................. 61
-iii- 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
-iv- INDENTURE AND SECURITY AGREEMENT (N3760C) This INDENTURE AND SECURITY AGREEMENT (N3760C), dated as of January 30, 2003, is made by and between DELTA AIR LINES, INC., a Delaware corporation (together with its successors and permitted assigns, "Company"), and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Loan Trustee hereunder (together with its permitted successors hereunder, "Loan Trustee"). W I T N E S S E T H: WHEREAS, the parties desire by this Indenture (such term and other capitalized terms used herein without definition being defined as provided in Article I), among other things, to provide for (i) the issuance by Company of the Equipment Notes and (ii) the assignment, mortgage and pledge by Company to Loan Trustee, as part of the Collateral hereunder, among other things, of all of Company's estate, right, title and interest in and to the Aircraft, as security for, among other things, Company's obligations to Loan Trustee, for the ratable benefit and security of Noteholders, subject to Section 2.13 and Article III; WHEREAS, all things have been done to make the Equipment Notes, when executed by Company and authenticated and delivered by Loan Trustee hereunder, the valid, binding and enforceable obligations of Company; and WHEREAS, all things necessary to make this Indenture a legal, valid and binding obligation of Company for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have occurred; GRANTING CLAUSE NOW, THEREFORE, to secure the prompt and complete payment (whether at stated maturity, by acceleration or otherwise) of principal of, Make-Whole Amount, if any, Break Amount, if any, and interest on, the Equipment Notes and all other amounts payable by Company under the Operative Documents and the performance and observance by Company of all the agreements and covenants to be performed or observed by Company for the benefit of Noteholders and Indenture Indemnitees contained in the Operative Documents and to secure the Related Secured Obligations under any Related Indentures, and in consideration of the premises and of the covenants contained in the Operative Documents, and for other good and valuable consideration given by Loan Trustee, Noteholders and Indenture Indemnitees to Company at or before the Closing Date, the receipt of which is hereby acknowledged, Company does hereby grant, bargain, sell, convey, transfer, mortgage, assign, pledge and confirm unto Loan Trustee and its successors in trust and permitted assigns, for the security and benefit of Loan Trustee, Noteholders, Related Noteholders and Indenture Indemnitees, a first priority security interest in, and mortgage lien on, all estate, right, title and interest of Company in, to and under, all and singular, the following described properties, rights, interests and privileges whether now or hereafter acquired (hereinafter sometimes referred to as the "Collateral"): (1) the Aircraft, including the Airframe and the Engines, whether or not any such Engine from time to time is installed on the Airframe or any other airframe or any other aircraft, and any and all Parts relating thereto, and, to the extent provided herein, all substitutions and replacements of, and additions, improvements, accessions and accumulations to, the Aircraft, including the Airframe, the Engines and any and all Parts (in each case other than any substitutions, replacements, additions, improvements, accessions and accumulations that constitute items excluded from the definition of Parts by clauses (b), (c), (d), (e) and (f) thereof) relating thereto (such Airframe and Engines as more particularly described in the Indenture Supplement executed and delivered with respect to the Aircraft on the Closing Date or with respect to any substitutions or replacements therefor) and together with all logs, manuals maintained on the Aircraft, modification and maintenance records at any time required to be maintained with respect to the Aircraft, in accordance with the rules and regulations of the FAA if the Aircraft is registered under the laws of the United States or the rules and regulations of the government of the country of registry if the Aircraft is registered under the laws of a jurisdiction other than the United States; (2) the Warranty Rights, together with all rights, powers, privileges, options and other benefits of Company under the same; (3) all requisition proceeds with respect to the Aircraft or any Part thereof, and all insurance proceeds with respect to the Aircraft or any Part thereof, but excluding all proceeds of, and rights under, any insurance maintained by Company and in excess of that required under Section 7.06(b); (4) all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or with Loan Trustee by or for the account of Company pursuant to any term of any Operative Document and held or required to be held by Loan Trustee hereunder or thereunder; and (5) all proceeds of the foregoing; PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions, so long as no Event of Default shall have occurred and be continuing, Company shall have the right, to the exclusion of Loan Trustee, (i) to quiet enjoyment of the Aircraft, the Airframe, the Parts and the Engines, and to possess, use, retain and control the Aircraft, the Airframe, the Parts and the Engines and all revenues, income and profits derived therefrom and (ii) with respect to the Warranty Rights, to exercise in Company's name all rights and powers of the Buyer (as defined in the Purchase Agreement) under the Warranty Rights and to retain any recovery or benefit resulting from the enforcement of any warranty or indemnity or other obligation under the Warranty Rights; provided, further, that notwithstanding the occurrence and continuation of an Event of Default, Loan Trustee shall not enter into any amendment or modification of the Purchase Agreement that would alter the rights, benefits or obligations of Company thereunder; -2- 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 -3- 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". -4- (e) All references in this Indenture to a "government" are to such government and any instrumentality or agency thereof. ARTICLE II THE EQUIPMENT NOTES Section 2.01 Form of Equipment Notes. The Equipment Notes shall be substantially in the form set forth below: THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE OFFERED FOR SALE OR SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE OR OTHER LAWS OR EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS ARE AVAILABLE. DELTA AIR LINES, INC. SERIES 2003-1 [___] EQUIPMENT NOTE DUE [___] ISSUED IN CONNECTION WITH THE BOEING 737-832 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N3760C No. Date: [ , ] ----- ------ -- $ ---------------- 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 - ---------------------- (1) To be inserted in non-installment Equipment Notes. (2) To be inserted in installment Equipment Notes. -5- amount sufficient to discharge in full the unpaid principal amount and all accrued and unpaid interest on, and any other amounts due under, this Equipment Note.]2 Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of interest payable. For purposes hereof, the term "Indenture" means the Indenture and Security Agreement (N3760C), dated as of January 30, 2003, between Company and U.S. Bank Trust National Association, as Loan Trustee ("Loan Trustee"), as the same may be amended, supplemented or otherwise modified from time to time in accordance with its terms. All capitalized terms used in this Equipment Note and not defined herein, unless the context otherwise requires, shall have the respective meanings set forth or incorporated by reference, and shall be construed and interpreted in the manner described, in the Indenture. This Equipment Note shall bear interest, payable on demand, at the Past Due Rate (and not the Debt Rate) (calculated on the basis of a year of 360 days and actual days elapsed during which such amount accrues) on any principal amount and (to the extent permitted by applicable law) interest and any other amounts payable hereunder not paid when due for any period during which the same is overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid in the manner provided herein or in the Indenture when due (whether at stated maturity, by acceleration or otherwise). There shall be maintained an Equipment Note Register for the purpose of registering transfers and exchanges of Equipment Notes at the Corporate Trust Office of Loan Trustee, or at the office of any successor trustee, in the manner provided in Section 2.07 of the Indenture. The principal amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of Loan Trustee, or as otherwise provided in the Indenture. Company shall not have any responsibility for the distribution of any such payment to Noteholder of this Equipment Note. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Equipment Note, except that in the case of any final payment with respect to this Equipment Note, the Equipment Note shall be surrendered to Loan Trustee for cancellation. The holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided in the Indenture, including the subordination provisions referred to below, each payment of an installment of principal amount, Make-Whole Amount, if any, Break Amount, if any, and interest received by it hereunder shall be applied: first, to the payment of Break Amount, if any, on this Equipment Note, second, to the payment of accrued interest on this Equipment Note (as well as any interest on any overdue principal amount, and, to the extent permitted by law, any overdue Make-Whole Amount, if any, any overdue interest and other overdue amounts hereunder) to the date of such payment; third, to the payment of Make-Whole Amount, if any, and fourth, to the payment of the principal amount of this Equipment Note (or portion hereof) then due. This Equipment Note is one of the Equipment Notes referred to in the Indenture which have been or are to be issued by Company pursuant to the terms of the Indenture. The Collateral is held by Loan Trustee as security, in part, for the Equipment Notes. The provisions of this Equipment Note are subject to the Indenture, the Related Indentures and the Participation -6- Agreement. Reference is hereby made to the Indenture, the Related Indentures and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Equipment Note (including as a "Related Equipment Note" under each Related Indenture) and the rights and obligations of the holders of, and the nature and extent of the security for, any other Equipment Notes executed and delivered under the Indenture, to all of which terms and conditions in the Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Equipment Note. As provided in the Indenture and subject to certain limitations therein set forth, this Equipment Note is exchangeable for a like aggregate principal amount of Equipment Notes of the same Series of different authorized denominations, as requested by the holder surrendering the same. Prior to the due presentment for registration of transfer of this Equipment Note, Company and Loan Trustee shall deem and treat the Person in whose name this Equipment Note is registered on the Equipment Note Register as the absolute owner and holder hereof for the purpose of receiving all amounts payable with respect to this Equipment Note and for all purposes, and neither Company nor Loan Trustee shall be affected by notice to the contrary. This Equipment Note is subject to redemption as provided in Sections 2.10 and 2.11 of the Indenture but not otherwise. [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series G Equipment Notes](3) [Series G Equipment Notes and Series C Equipment Notes](4), and this Equipment Note is issued subject to such provisions. Noteholder of this Equipment Note, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs Loan Trustee on such Noteholder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (c) appoints Loan Trustee such Noteholder's attorney-in-fact for such purpose.](5) [Without limiting the foregoing, the](6) [The](7) Noteholder of this Equipment Note, by accepting the same, agrees that if such Noteholder, in its capacity as a Noteholder, receives any payment or distribution on any Secured Obligation in respect of this Equipment Note that it is not entitled to receive under Section 2.13 or Article III of the Indenture, it shall hold any amount so received in trust for Loan Trustee and forthwith turn over such amount to Loan Trustee in the form received to be applied as provided in Article III of the Indenture. Unless the certificate of authentication hereon has been executed by or on behalf of Loan Trustee by manual signature, this Equipment Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. - ------------------- (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. -7- 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: -8- 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 - ------------------------ 8 To be inserted on installment Equipment Notes. -9- (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment hereunder or under any Equipment Note becomes due and payable is not a Business Day, then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day with the same force and effect as if made on such scheduled date, and such extension of time shall be included in the computation of interest payable. The Equipment Notes shall be executed on behalf of Company by the manual or facsimile signature of one of its authorized officers. Equipment Notes bearing the signatures of individuals who were at the time of execution the proper officers of Company shall bind Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes or did not hold such offices at the respective dates of such Equipment Notes. No Equipment Note shall be secured by or entitled to any benefit under this Indenture or be valid or obligatory for any purposes unless there appears on such Equipment Note a certificate of authentication in the form provided herein executed by Loan Trustee by the manual signature of one of its authorized officers, and such certificate upon any Equipment Notes shall be conclusive evidence, and the only evidence, that such Equipment Note has been duly authenticated and delivered hereunder. Section 2.03 Method of Payment. The principal amount of, interest on, Make-Whole Amount, if any, and, except to the extent expressly provided herein, all other amounts due to any Noteholder under each Equipment Note or otherwise payable hereunder shall be payable by Company in Dollars by wire transfer of immediately available funds not later than 10:00 a.m. (New York City time) on the due date of payment to Loan Trustee at the Corporate Trust Office for distribution among Noteholders in the manner provided herein. Company shall not have any responsibility for the distribution of such payment to any Noteholder. Notwithstanding the foregoing or any provision in any Equipment Note to the contrary, Loan Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Noteholder (with a copy to Company), all amounts paid by Company hereunder and under such Noteholder's Equipment Note or Equipment Notes to such Noteholder or a nominee therefor (including all amounts distributed pursuant to Article III) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 12:00 noon (New York City time) on the due date of payment, to an account maintained by such Noteholder with a bank located in the continental United States the amount to be distributed to such Noteholder, for credit to the account of such Noteholder maintained at such bank; provided that, in the event the Equipment Notes are not held by Subordination Agent on behalf of Pass Through Trustees, Loan Trustee may at its option pay such amounts by check mailed to Noteholder's address as it appears on the Equipment Note Register. If, after its receipt of funds at the place and prior to the time specified above in the immediately preceding sentence, Loan Trustee fails (other than as a result of a failure of Noteholder to provide it with wire transfer instructions) to make any such payment required to be paid by wire transfer as provided in the immediately preceding sentence on the Business Day it receives such funds, Loan Trustee, in its individual capacity and not as trustee, agrees to compensate such Noteholders for loss of use of funds at the Federal Funds Rate until such payment is made and Loan Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Equipment Note, except that, in the case of the final payment in respect of any Equipment Note, such Equipment Note shall be surrendered to Loan Trustee for -10- cancellation. Notwithstanding any other provision of this Indenture to the contrary, Loan Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for Loan Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 1:00 p.m. (New York City time) at the place of payment. Section 2.04 Withholding Taxes. Loan Trustee shall exclude and withhold at the appropriate rate from each payment of principal amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Equipment Note (which exclusion and withholding shall constitute payment of such amounts payable hereunder or in respect of such Equipment Notes, as applicable) any and all withholding taxes applicable thereto as required by law. Loan Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Equipment Notes, to withhold such amounts (which withholding shall constitute payment of such amounts payable hereunder or in respect of such Equipment Notes, as applicable) and timely pay the same to the appropriate authority in the name of and on behalf of Noteholders, that it will file any necessary withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Noteholder (with a copy to Company) appropriate documentation showing the payment thereof, together with such additional documentary evidence as any such Noteholder may reasonably request from time to time. Loan Trustee agrees to file any other information reports it is required to file under United States law. Section 2.05 Application of Payments. Subject always to Section 2.13 and except as otherwise provided in Article III, in the case of each Equipment Note, each payment of an installment of principal amount, Make-Whole Amount, if any, Break Amount, if any, and interest paid thereon shall be applied: FIRST, to the payment of Break Amount, if any, with respect to such Equipment Note; and SECOND, to the payment of accrued interest on such Equipment Note (as well as any interest on any overdue principal amount and (to the extent permitted by law) any overdue Make-Whole Amount, if any, any overdue interest and any other overdue amounts thereunder) to the date of such payment; and THIRD, to the payment of Make-Whole Amount, if any; and FOURTH, to the payment of principal amount of such Equipment Note (or portion thereof) then due thereunder. Section 2.06 Termination of Interest in Collateral. No Noteholder, Related Noteholder or Indenture Indemnitee shall, as such, have any further interest in, or other right with respect to, the Collateral when and if (i) the principal amount of, Make-Whole Amount, if any, and interest (including interest on any overdue amounts) on and all other amounts due under all Equipment Notes held by such Noteholder and all other sums then payable to such Noteholder or Indenture Indemnitee, as the case may be, hereunder and under the Participation -11- Agreement by Company, and (ii) amounts (if any) available for distribution in accordance with clause "fourth" of Section 3.03 hereof ((i) and (ii) collectively, "Secured Obligations") have been paid in full. Section 2.07 Registration, Transfer and Exchange of Equipment Notes. Loan Trustee shall keep a register or registers (the "Equipment Note Register") in which Loan Trustee shall provide for the registration of Equipment Notes and the registration of transfers of Equipment Notes. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Equipment Note Register shall be kept at the Corporate Trust Office of Loan Trustee. Loan Trustee is hereby appointed "Equipment Note Registrar" for the purpose of registering Equipment Notes and transfers of Equipment Notes. A holder of any Equipment Note intending to exchange or transfer such Equipment Note shall surrender such Equipment Note to Loan Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Equipment Note of the same Series, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Equipment Note and subject to satisfaction of Section 2.09, Company shall execute, and Loan Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Equipment Notes of an equal aggregate principal amount and of the same Series. At the option of Noteholder, Equipment Notes may be exchanged for other Equipment Notes of the same Series of any authorized denominations of an equal aggregate principal amount, upon surrender of the Equipment Notes to be exchanged to Loan Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so surrendered for exchange, Company shall execute, and Loan Trustee shall authenticate and deliver, the Equipment Notes which Noteholder making the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer or exchange of Equipment Notes (whether under this Section 2.07 or under Section 2.08 or otherwise under this Indenture) shall be the valid obligations of Company evidencing the same respective obligations, and entitled to the same security and benefits under this Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange. Every Equipment Note presented or surrendered for registration of transfer shall be duly endorsed or be accompanied by a written instrument of transfer in form satisfactory to Loan Trustee, duly executed by Noteholder or such Noteholder's attorney duly authorized in writing, and Loan Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act of 1933, as amended, and the securities laws of any applicable state or jurisdiction. Loan Trustee shall make a notation on each new Equipment Note of the amount of all payments of principal amount previously made on the old Equipment Note or Equipment Notes with respect to which such new Equipment Note is issued and the date to which interest on such old Equipment Note or Equipment Notes has been paid. Principal, interest and all other amounts shall be deemed to have been paid on such new Equipment Note to the date on which such amounts have been paid on such old Equipment Note. Company shall not be required to exchange any surrendered Equipment Notes as provided above (a) during the ten-day period preceding the due date of any payment on such Equipment Note or (b) that has been called for redemption. Company and Loan Trustee shall in all cases deem and treat the Person in whose name any Equipment Note has been issued and registered on the Equipment Note Register as the absolute owner and Noteholder of such Equipment Note for the purpose of receiving payment of all amounts payable with respect to such Equipment Note and for all other purposes, and neither Company nor Loan Trustee shall be affected by any notice to the contrary. Loan Trustee will promptly notify Company of each registration of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of an -12- Equipment Note, agrees to the provisions of the Operative Documents applicable to Noteholders, and shall be deemed to have represented, warranted and covenanted to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by Noteholders, including Pass Through Trustees, in the Participation Agreement. Subject to compliance by Noteholder and any transferee of the requirements set forth in this Section 2.07 and in Section 2.09, Loan Trustee and Company shall use all reasonable efforts to issue new Equipment Notes upon transfer or exchange within ten Business Days of the date an Equipment Note is surrendered for transfer or exchange. Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note becomes mutilated, destroyed, lost or stolen, Company shall, upon the written request of the holder of such Equipment Note and subject to satisfaction of this Section 2.08 and of Section 2.09, execute and Loan Trustee shall authenticate and deliver in replacement thereof a new Equipment Note of the same Series, payable in the same principal amount, dated the same date and captioned as issued in connection with the Aircraft. If the Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to Loan Trustee, and a photocopy thereof shall be furnished to Company. If the Equipment Note being replaced has been destroyed, lost or stolen, the holder of such Equipment Note shall furnish to Company and Loan Trustee such security or indemnity as may be required by them to save Company and Loan Trustee harmless and evidence satisfactory to Company and Loan Trustee of the destruction, loss or theft of such Equipment Note and of the ownership thereof. Section 2.09 Payment of Expenses on Transfer; Cancellation. (a) No service charge shall be made to a Noteholder for any registration of transfer or exchange of Equipment Notes, but Loan Trustee, as Equipment Note Registrar, may require payment of a sum sufficient to cover any Tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Equipment Notes. (b) Loan Trustee shall cancel all Equipment Notes surrendered for replacement, redemption, transfer, exchange, payment or cancellation, shall keep a copy of such canceled Equipment Notes, and shall send the original canceled Equipment Notes marked "canceled" to Company. Section 2.10 Mandatory Redemption of Equipment Notes. (a) Company shall redeem the Equipment Notes in whole in connection with an Event of Loss in respect of the Airframe or the Airframe and the Engines installed thereon (unless Company has performed the option set forth in Section 7.05(a)(i) with respect thereto) on or before the Loss Payment Date at a redemption price equal to 100% of the unpaid principal amount thereof, together with all accrued interest thereon to (but excluding) the date of redemption, Break Amount, if any (but excluding any Make-Whole Amount) and all other Secured Obligations (other than any Related Secured Obligations) owed or then due and payable to Noteholders. (b) Company shall redeem the Series G Equipment Notes in whole or in part in connection with an Event of Loss in respect of a Core Aircraft (other than the Aircraft) (unless Company has performed the option set forth in Section 7.05(a)(i) of the Related Indenture with respect to such Core Aircraft) on or before the "Loss Payment Date" (as defined in such Related -13- Indenture) in an amount equal to the lesser of (x) the "Excess Amount" (as defined in such Related Indenture) multiplied by a fraction, the numerator of which is the then outstanding aggregate principal amount of the Series G Equipment Notes and the denominator of which is the sum of the then outstanding aggregate principal amount of the Series G Equipment Notes and the Related Series G Equipment Notes issued with respect to Core Aircraft other than the Core Aircraft which suffered such Event of Loss and (y) the then outstanding principal amount of Series G Equipment Notes, at a redemption price equal to 100% of the amount of the unpaid principal amount of the Series G Equipment Notes being redeemed, together, in the case of (x) and (y), with all accrued interest on such amount of Series G Equipment Notes being redeemed to (but excluding) the date of redemption and Break Amount, if any (but excluding any Make-Whole Amount). (c) Company shall redeem the Equipment Notes in whole or in part in connection with the receipt of payments made by a Related Loan Trustee pursuant to clause "fourth" of Section 3.03 of a Related Indenture. Section 2.11 Voluntary Redemption of Equipment Notes. Company shall not redeem in whole or in part any Equipment Notes, except in accordance with the provisions of Section 2.10 above. Section 2.12 Redemptions; Notice of Redemptions; Repurchases. (a) No redemption of any Equipment Note may be made except to the extent and in the manner expressly permitted by this Indenture. At such time as no Pass Through Certificates are outstanding, Company may at any time repurchase any of the Equipment Notes at any price in the open market and may hold, resell or surrender such Equipment Notes to Loan Trustee for cancellation. (b) Notice of redemption with respect to the Equipment Notes, other than redemptions made pursuant to Section 2.10(c), shall be given by Loan Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Noteholder at such Noteholder's address appearing in the Equipment Note Register. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Equipment Note, and that, if any such Equipment Notes are then outstanding, interest on such Equipment Notes shall cease to accrue on and after such redemption date and (4) the place or places where such Equipment Notes are to be surrendered for payment of the redemption price. (c) On or before the redemption date, Company (or any person on behalf of Company) shall, to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed on the redemption date shall not then be held in the Collateral, deposit or cause to be deposited with Loan Trustee by 10:00 a.m. (New York City time) on the redemption date in immediately available funds the redemption price of the Equipment Notes to be redeemed. (d) Notice of redemption having been given as aforesaid (and not revoked as permitted by Section 2.11), the Equipment Notes to be redeemed shall, on the redemption date, become due and payable at the Corporate Trust Office of Loan Trustee, and from and after such -14- redemption date (unless there is a default in the deposit of the redemption price pursuant to Section 2.12(c)) any such Equipment Notes then outstanding shall cease to bear interest. Upon surrender of any such Equipment Note for redemption in accordance with said notice, such Equipment Note shall be redeemed at the redemption price. (e) Any redemption in part of any Series of Equipment Notes made pursuant to Section 2.10(b) or 2.10(c) shall be made pro rata on the basis of unpaid principal amount of such Series of Equipment Notes being redeemed. Section 2.13 Subordination. (a) The indebtedness evidenced by the Series C Equipment Notes is, to the extent and in the manner provided in this Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations in respect of the Series G Equipment Notes, and the Series C Equipment Notes are issued subject to such provisions. The indebtedness evidenced by the Series D Equipment Notes is, to the extent and in the manner provided in this Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations in respect of the Series G Equipment Notes and the Series C Equipment Notes, and the Series D Equipment Notes are issued subject to such provisions. By acceptance of its Equipment Notes of any Series, each Noteholder of such Series (a) agrees to and shall be bound by such provisions, (b) authorizes and directs Loan Trustee on such Noteholder's behalf to take any action necessary or appropriate to effectuate the subordination as provided in this Indenture and (c) appoints Loan Trustee as such Noteholder's attorney-in-fact for such purpose. (b) Company, Loan Trustee and, by acceptance of its Equipment Notes of any Series, each Noteholder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Noteholder of such Series, including any payment or distribution of cash, property or securities, after the occurrence of any of the events referred to in Section 4.01(f) or after the commencement of any proceedings of the type referred to in Sections 4.01(g), (h) or (i), except as expressly provided in Article III. (c) By the acceptance of its Equipment Notes of any Series, each Noteholder of such Series agrees that if such Noteholder, in its capacity as a Noteholder, receives any payment or distribution on any Secured Obligations in respect of such Series that it is not entitled to receive under this Section 2.13 or Article III hereof, it will hold any amount so received in trust for Loan Trustee and forthwith turn over such amount to Loan Trustee in the form received to be applied as provided in Article III. Section 2.14 Certain Payments. Company agrees to pay to Loan Trustee for distribution in accordance with Section 3.04: (a) an amount or amounts equal to the fees payable to Primary Liquidity Provider under Section 2.03 of the Primary Liquidity Facility and the related Fee Letter (as defined in the Intercreditor Agreement), multiplied by a fraction, the numerator of which is the sum of the then outstanding aggregate principal amount of the Series G Equipment Notes and the denominator of which is the sum of the then outstanding aggregate principal amount of all "Series G Equipment Notes" (as defined in the Intercreditor Agreement); -15- (b) if any payment default shall have occurred and be continuing with respect to interest on any Series G Equipment Note, (x) the excess, if any, of (1) the amount equal to the sum of interest on any Unpaid Advance or Applied Provider Advance payable under Section 3.07 of the Primary Liquidity Facility plus any other amounts payable in respect of such Unpaid Advance or Applied Provider Advance under Section 3.01, 3.03 or 3.09 of the Primary Liquidity Facility (or, if Policy Provider has made a payment equivalent to such an Advance as would have been payable under Section 3.07 of the Primary Liquidity Facility in respect of the Class G Certificates had such Advance been made) under which such Unpaid Advance or Applied Provider Advance was made over (2) the sum of Investment Earnings from any Final Advance plus any amount of interest at the Past Due Rate actually payable (whether or not in fact paid) by Company in respect of the overdue scheduled interest on the "Series G Equipment Notes" (as defined in the Intercreditor Agreement) was made, multiplied by (y) a fraction, the numerator of which is the then aggregate overdue amounts of interest on the Series G Equipment Notes (other than interest becoming due and payable solely as a result of acceleration of any such Equipment Notes) and the denominator of which is the then aggregate overdue amounts of interest on all "Series G Equipment Notes", (as defined in the Intercreditor Agreement) (other than interest becoming due and payable solely as a result of acceleration of any such "Series G Equipment Notes"); (c) any amounts owed to Primary Liquidity Provider by Subordination Agent as borrower under Section 3.01 (other than in respect of an Unpaid Advance or Applied Provider Advance), 3.03 (other than in respect of an Unpaid Advance or Applied Provider Advance), 7.05 and 7.07 of the Primary Liquidity Facility (or similar provisions of any Replacement Primary Liquidity Facility) multiplied by the fraction specified in the foregoing clause (a); (d) an amount or amounts equal to the compensation, including reasonable expenses and disbursements actually incurred, payable to Subordination Agent under Section 6.07 of the Intercreditor Agreement, multiplied by the fraction specified in the foregoing clause (a) (but in any event without duplication of any amount or amounts payable by Company in respect of such compensation under any other Operative Document or Pass Through Document); and (e) an amount or amounts equal to all compensation and reimbursement of fees, expenses and disbursements (including payment of indemnities) owed to Policy Provider under the Policy Provider Agreement and any Policy Provider Interest Amount, multiplied by the fraction specified in the foregoing clause (a). For purposes of this paragraph, the terms "Applied Provider Advance", "Cash Collateral Account", "Class G Certificates", "Final Advance", "Investment Earnings", "Policy Provider Interest Amount", "Replacement Primary Liquidity Facility" and "Unpaid Advance" have the meanings specified in the Primary Liquidity Facility or the Intercreditor Agreement. Section 2.15 Repayment of Monies for Equipment Note Payments Held by Loan Trustee. Any money held by Loan Trustee in trust for any payment of the principal of, Make-Whole Amount, if any, Break Amount, if any, or interest or any other amounts due on, any Equipment Note, including, without limitation, any money deposited pursuant to Section 2.12(c) or Section 10.01, and remaining unclaimed for a 730-day period (for purposes of calculating this -16- 730-day period, all days on which the payment of such money shall not have been made because of operation of law shall be excluded) after the due date for such payment (or such lesser time as Loan Trustee is satisfied, after 60 days' notice from Company, is one month prior to the escheat period provided under applicable state law) shall be paid to Company. Noteholders of any outstanding Equipment Notes shall thereafter, as unsecured general creditors, look only to Company for payment thereof, and all liability of Loan Trustee with respect to such trust money shall thereupon cease. Loan Trustee, before being required to make any such repayment, may at the expense of Company cause to be mailed to each such Noteholder notice that such money remains unclaimed. After a date specified in such notice, which may not be less than 30 days from the date of mailing, any unclaimed balance of such money then remaining will be repaid to Company as provided herein. Section 2.16 Directions by Subordination Agent. So long as Subordination Agent is a Noteholder, notwithstanding anything contained herein or in any other Operative Document to the contrary, in exercising its right to vote the Equipment Notes held by it, or in giving or taking any direction, consent, request, demand, instruction, authorization, notice, waiver or other action provided by this Indenture or in respect of the Equipment Notes to be given or taken by a Noteholder (each such vote or other action, a "Direction") in respect of such Equipment Notes, Subordination Agent may act in accordance with any votes, directions, consents, requests, demands, instructions, authorizations, notices, waivers or other actions given or taken by any applicable Pass Through Trustee or the Controlling Party pursuant to the Intercreditor Agreement, including without limitation pursuant to Section 2.06, Article IV or Section 8.01(b) thereof. Subordination Agent shall be permitted (x) to give a Direction with respect to less than the entire principal amount of any single Equipment Note held by it, and (y) to give different Directions with respect to different portions of the principal amount of any single Equipment Note held by it. Any Direction given by Subordination Agent at any time with respect to more than a majority in aggregate unpaid principal amount of all of the Equipment Notes issued and then outstanding hereunder shall be deemed to have been given by a Majority in Interest of Noteholders. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE COLLATERAL Section 3.01 Basic Distributions. Except as otherwise provided in Sections 3.02, 3.03 and 3.04, each periodic payment by Company of regularly scheduled installments of principal or interest on the Equipment Notes received by Loan Trustee shall be promptly distributed in the following order of priority: FIRST, so much of such payment as is required to pay in full the aggregate amount of the payment or payments of principal amount and interest (as well as any interest on any overdue principal amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series G Equipment Notes shall be distributed to Noteholders of Series G Equipment Notes ratably, without priority of one over the other, in the proportion that the amount of such payment or -17- payments then due under each Series G Equipment Note bears to the aggregate amount of the payments then due under all Series G Equipment Notes; SECOND, after giving effect to clause "first" above, so much of such payment remaining as is required to pay in full the aggregate amount of the payment or payments of principal amount and interest (as well as any interest on any overdue principal amount and, to the extent permitted by applicable law, on any overdue interest and other overdue amounts) then due under all Series C Equipment Notes shall be distributed to Noteholders of Series C Equipment Notes ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Equipment Note bears to the aggregate amount of the payments then due under all Series C Equipment Notes; THIRD, after giving effect to clause "second" above, so much of such payment remaining as is required to pay in full the aggregate amount of the payment or payments of principal amount and interest (as well as any interest on any overdue principal amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series D Equipment Notes shall be distributed to Noteholders of Series D Equipment Notes ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Equipment Note bears to the aggregate amount of the payments then due under all Series D Equipment Notes; and FOURTH, the balance, if any, of such installment remaining thereafter shall be distributed to Company. Section 3.02 Event of Loss; Mandatory Redemption; Optional Redemption. Except as otherwise provided in Sections 3.03 and 3.04 and subject to the following proviso, any payments received by Loan Trustee with respect to the Aircraft as the result of (a) an Event of Loss with respect to the Aircraft or with respect to another Core Aircraft (including amounts paid by Company pursuant to Section 2.10(a) or (b)), or (b) a mandatory redemption of the Equipment Notes pursuant to Section 2.10(c) shall be applied to redemption of the Equipment Notes pursuant to Section 2.10, and to payment of all other Secured Obligations by applying such funds in the following order of priority: FIRST, (i) to reimburse Loan Trustee and Noteholders for any reasonable costs or expenses actually incurred in connection with such redemption for which they are entitled to reimbursement, or indemnity by Company, under the Operative Documents; and then (ii) to pay any other amounts then due (except as provided in clause "second" below) to Loan Trustee, Noteholders and Indenture Indemnitees under this Indenture, the Participation Agreement or the Equipment Notes; SECOND, (i) so much of such payments or amounts remaining as is required to pay in full the aggregate unpaid principal amount of all Series G Equipment Notes (or, in the case of payments made pursuant to Section 2.10(b), the amount of unpaid principal amount of Series G Equipment Notes being redeemed) and the accrued but unpaid interest thereon, Break Amount, if any, with respect to the Series G Equipment Notes (or, -18- in the case of payments made pursuant to Section 2.10(b), the accrued but unpaid interest on, and Break Amount, if any, with respect to, such Series G Equipment Notes being redeemed) and all other Secured Obligations in respect of the Series G Equipment Notes (or, in the case of payments made pursuant to Section 2.10(b), other Secured Obligations in respect of the Series G Equipment Notes being redeemed) to the date of distribution shall be distributed to Noteholders of Series G Equipment Notes ratably, without priority of one over the other, in the proportion that the aggregate unpaid principal amount of all Series G Equipment Notes held by each Noteholder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution bears to the aggregate unpaid principal amount of all Series G Equipment Notes held by all such Noteholders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to subclause (i) above, so much of such payments or amounts remaining as is required to pay in full the aggregate unpaid principal amount of all Series C Equipment Notes and the accrued but unpaid interest thereon, Break Amount, if any, with respect to the Series C Equipment Notes and all other Secured Obligations in respect of the Series C Equipment Notes to the date of distribution shall be distributed to Noteholders of Series C Equipment Notes ratably, without priority of one over the other, in the proportion that the aggregate unpaid principal amount of all Series C Equipment Notes held by each Noteholder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution bears to the aggregate unpaid principal amount of all Series C Equipment Notes held by all such Noteholders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (iii) after giving effect to subclause (ii) above, so much of such payments or amounts remaining as is required to pay in full the aggregate unpaid principal amount of all Series D Equipment Notes and the accrued but unpaid interest thereon, Break Amount, if any, with respect to the Series D Equipment Notes and all other Secured Obligations in respect of the Series D Equipment Notes to the date of distribution shall be distributed to Noteholders of Series D Equipment Notes, ratably, without priority of one over the other, in the proportion that the aggregate unpaid principal amount of all Series D Equipment Notes held by each Noteholder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution bears to the aggregate unpaid principal amount of all Series D Equipment Notes held by all such Noteholders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and THIRD, the balance, if any, of such payments shall be distributed to Company. Notwithstanding the foregoing, any insurance, condemnation or similar proceeds resulting from an Event of Loss that are received by Loan Trustee shall be held or disbursed by Loan Trustee as provided by Sections 7.05(c) and 7.06(d). Any such money held by Loan Trustee shall be invested as provided in Section 5.06. No Make-Whole Amount shall be payable on the Equipment Notes in connection with their redemption as a result of (i) an Event of Loss in respect of the Airframe or the Airframe and the Engines installed thereon, (ii) a mandatory redemption of Equipment Notes pursuant to Section 2.10(b) or (iii) a mandatory redemption of Equipment Notes pursuant to Section 2.10(c). -19- Section 3.03 Payments after Event of Default. Except as otherwise provided in Section 3.04, all payments received and amounts held or realized by Loan Trustee (including any amounts realized by Loan Trustee from the exercise of any remedies pursuant to Article IV) after both an Event of Default shall have occurred and be continuing and the Equipment Notes shall have become due and payable pursuant to Section 4.02(a), as well as all payments or amounts then held by Loan Trustee as part of the Collateral, shall be promptly distributed by Loan Trustee in the following order of priority: FIRST, so much of such payments or amounts as is required (i) to reimburse Loan Trustee, to the extent Loan Trustee is entitled to be reimbursed or indemnified under the Operative Documents, for any Tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the Collateral and every part thereof pursuant to Section 4.02(a)) actually incurred by Loan Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, reasonable attorneys' fees and expenses, court costs and any other expenditures actually incurred or expenditures or advances made by Loan Trustee or Noteholders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by Loan Trustee or any Noteholder, liquidated or otherwise, upon such Event of Default shall be applied by Loan Trustee as between itself and Noteholders in reimbursement of such expenses and any other expenses for which Loan Trustee or Noteholders are entitled to reimbursement under any Operative Document, and (ii) to pay all amounts payable (except as provided in clauses "second", "third" and "fourth" below) to the other Indenture Indemnitees hereunder and under the Participation Agreement; and in case the aggregate amount so to be distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as is required to reimburse the then existing or prior Noteholders for payments made pursuant to Section 5.03 (to the extent not previously reimbursed) shall be distributed to such then existing or prior Noteholders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Noteholder pursuant to Section 5.03; THIRD, (i) so much of such payments or amounts remaining as is required to pay in full the aggregate unpaid principal amount of all Series G Equipment Notes and the accrued but unpaid interest thereon, Break Amount, if any, with respect to the Series G Equipment Notes and all other Secured Obligations in respect of the Series G Equipment Notes to the date of distribution shall be distributed to Noteholders of Series G Equipment Notes ratably, without priority of one over the other, in the proportion that the aggregate unpaid principal amount of all Series G Equipment Notes held by each Noteholder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution bears to the aggregate unpaid principal amount of all Series G Equipment Notes held by all such Noteholders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to subclause (i) above, so much of such payments or amounts remaining as is required to pay in full the aggregate unpaid principal amount of all Series C Equipment Notes and -20- the accrued but unpaid interest thereon, Break Amount, if any, with respect to the Series C Equipment Notes and all other Secured Obligations in respect of the Series C Equipment Notes to the date of distribution shall be distributed to Noteholders of Series C Equipment Notes ratably, without priority of one over the other, in the proportion that the aggregate unpaid principal amount of all Series C Equipment Notes held by each Noteholder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution bears to the aggregate unpaid principal amount of all Series C Equipment Notes held by all such Noteholders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (iii) after giving effect to subclause (ii) above, so much of such payments or amounts remaining as is required to pay in full the aggregate unpaid principal amount of all Series D Equipment Notes and the accrued but unpaid interest thereon, Break Amount, if any, with respect to the Series D Equipment Notes and all other Secured Obligations in respect of the Series D Equipment Notes to the date of distribution shall be distributed to Noteholders of Series D Equipment Notes, ratably, without priority of one over the other, in the proportion that the aggregate unpaid principal amount of all Series D Equipment Notes held by each Noteholder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution bears to the aggregate unpaid principal amount of all Series D Equipment Notes held by all such Noteholders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; FOURTH, (i) so much of such payments or amounts remaining as is required to pay in full the aggregate unpaid principal amount of all Related Series G Core Equipment Notes and the accrued but unpaid interest thereon, Break Amount, if any, with respect to such Related Series G Core Equipment Notes and all other Related Secured Obligations in respect of the Related Series G Core Equipment Notes to the date of distribution shall be distributed to Related Loan Trustees for further distribution to Related Noteholders of Related Series G Core Equipment Notes ratably, without priority of one over the other, in the proportion that the aggregate unpaid principal amount of all Related Series G Core Equipment Notes held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution bears to the aggregate unpaid principal amount of all Related Series G Core Equipment Notes held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to subclause (i) above, so much of such payments or amounts remaining as is required to pay in full the aggregate unpaid principal amount of all remaining Related Series G Non-Core Equipment Notes and the accrued but unpaid interest thereon, Break Amount, if any, with respect to the Related Series G Non-Core Equipment Notes and all other Related Secured Obligations in respect of the Related Series G Non-Core Equipment Notes to the date of distribution shall be distributed to Related Loan Trustees for further distribution to Related Noteholders of Related Series G Non-Core Equipment Notes ratably, without priority of one over the other, in the proportion that the aggregate unpaid principal amount of all Related Series G Non-Core Equipment Notes held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution bears to the aggregate unpaid principal amount of all Related Series G Non-Core Equipment Notes held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to subclause (ii) above, so much of such -21- payments or amounts remaining as is required to pay in full all Related Secured Obligations in respect of Related Series C Equipment Notes issued under any Related Indenture then due shall be distributed to Related Loan Trustees for further distribution to Related Noteholders of Related Series C Equipment Notes ratably, without priority of one over the other, in the proportion that the aggregate unpaid amount of all Related Secured Obligations in respect of such Related Series C Equipment Notes then due held by such holder bears to the aggregate unpaid amount of all other Related Secured Obligations in respect of such Related Series C Equipment Notes then due; and (iv) after giving effect to subclause (iii) above, so much of such payments or amounts remaining as is required to pay in full all Related Secured Obligations in respect of Related Series D Equipment Notes issued under any Related Indenture then due shall be distributed to Related Loan Trustees for further distribution to Related Noteholders of Related Series D Equipment Notes ratably, without priority of one over the other, in the proportion that the aggregate unpaid amount of all Related Secured Obligations in respect of such Related Series D Equipment Notes then due held by such holder bears to the aggregate unpaid amount of all other Related Secured Obligations in respect of such Related Series D Equipment Notes then due; and FIFTH, the balance, if any, of such payments or amounts shall be distributed to Company. No Make-Whole Amount shall be payable on the Equipment Notes as a consequence of or in connection with an Event of Default or the acceleration of the Equipment Notes. Section 3.04 Certain Payments. (a) Any payments received by Loan Trustee for which provision as to the application thereof is made in this Indenture other than in this Article III shall be applied as provided in those provisions. Without limiting the foregoing, any payments received by Loan Trustee which are payable to Company pursuant to any of the provisions of this Indenture other than those set forth in this Article III (including Sections 5.06, 7.05 and 7.06 hereof) shall be so paid to Company. Any payments received by Loan Trustee for which no provision as to the application thereof is made in this Indenture and for which such provision is made in any other Operative Document shall be applied forthwith to the purpose for which such payment was made in accordance with the terms of such other Operative Document. (b) Loan Trustee will distribute promptly upon receipt any indemnity payment received by it from Company pursuant to Section 4.02 of the Participation Agreement in respect of (i) U.S. Bank and Loan Trustee, (ii) Subordination Agent, (iii) any separate or successor trustee appointed pursuant to Section 8.02 hereof, (iv) Pass Through Trustees, (v) either Liquidity Provider and (vi) Policy Provider, in each case, directly to the Person entitled thereto. Any payment received by Loan Trustee from Company under Section 2.14 shall be distributed to Subordination Agent to be distributed in accordance with Section 2.03(c) of the Intercreditor Agreement. (c) Any payments received by Loan Trustee not constituting part of the Collateral or otherwise for which no provision as to the application thereof is made in any Operative Document shall be distributed by Loan Trustee to Company. Further, and except as -22- otherwise provided in Sections 3.02, 3.03 and 3.04, all payments received and amounts realized by Loan Trustee with respect to the Aircraft, to the extent received or realized at any time after payment in full of all Secured Obligations, as well as any amounts remaining as part of the Collateral after the occurrence of such payment in full, shall be distributed by Loan Trustee to Company. Section 3.05 Payments to Company. Any amounts distributed hereunder by Loan Trustee to Company shall be paid to Company (within the time limits contemplated by Section 2.03) by wire transfer of funds of the type received by Loan Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from Company to Loan Trustee from time to time. Section 3.06 Cooperation. Prior to making any distribution under this Article III, Loan Trustee shall consult with Related Loan Trustees to determine amounts payable with respect to the Related Secured Obligations. Loan Trustee shall cooperate with Related Loan Trustees and shall provide such information as shall be reasonably requested by each Related Loan Trustee to enable such Related Loan Trustee to determine amounts distributable under Article III of its Related Indenture. ARTICLE IV EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE Section 4.01 Events of Default. Each of the following events constitutes an "Event of Default" whether such event is voluntary or involuntary or comes about or is effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body and each such Event of Default is deemed to exist and continue so long as, but only as long as, it has not been remedied or explicitly waived: (a) Company fails to make any payment of principal amount of, Make-Whole Amount, if any, Break Amount, if any, or interest on, any Equipment Note within 15 days after such payment is due; (b) Company fails to make payment when the same is due of any amount (other than amounts referred to in Section 4.01(a)) due hereunder, under any Equipment Note or under any other Operative Document, and such failure continues unremedied for 30 days after the receipt by Company of written notice thereof from Loan Trustee or any Noteholder; (c) Company fails to carry and maintain insurance or indemnity on or with respect to the Aircraft in accordance with the provisions of Section 7.06; provided that no such failure to carry and maintain insurance shall constitute an Event of Default until the earlier of (i) the date such failure has continued unremedied for a period of 30 days after receipt by Loan Trustee of the notice of cancellation or lapse referred to in Section 7.06 or (ii) the date such insurance is not in effect as to Loan Trustee; -23- (d) Company fails to perform or observe any other covenant, condition or agreement to be performed or observed by it under any Operative Document, and such failure continues unremedied for a period of 60 days after receipt by Company of written notice thereof from Loan Trustee or any Noteholder; provided that, if such failure is capable of being remedied, no such failure shall constitute an Event of Default for a period of one year after such notice is received by Company so long as Company is diligently proceeding to remedy such failure; (e) any representation or warranty made by Company in any Operative Document was incorrect in any material respect at the time made, and such incorrectness continues to be material to the transactions contemplated hereby and continues unremedied for a period of 60 days after receipt by Company of written notice thereof from Loan Trustee; provided that, if such incorrectness is capable of being remedied, no such incorrectness shall constitute an Event of Default for a period of one year after such notice is received by Company so long as Company is diligently proceeding to remedy such incorrectness; (f) Company consents to the appointment of or the taking of possession by a receiver, trustee or liquidator in respect of a substantial part of its property, admits in writing its inability to pay its debts generally as they come due or makes a general assignment for the benefit of its creditors; (g) Company files a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization, liquidation or other relief as a debtor in a case under any bankruptcy laws or insolvency laws (as in effect at such time) or an answer admitting the material allegations of a petition filed against Company as a debtor in any such case, or Company as a debtor seeks relief by voluntary petition, answer or consent, under the provisions of any other bankruptcy or other similar law providing for the reorganization or winding-up of corporations (as in effect at such time), or Company seeks an agreement, composition, extension or adjustment with its creditors under such laws; (h) an order, judgment or decree is entered by any court of competent jurisdiction appointing, without the consent of Company, a receiver, trustee or liquidator of Company or sequestering any substantial part of its property, or granting any other relief in respect of Company as a debtor under any bankruptcy laws or insolvency laws (as in effect at such time), and any such order, judgment or decree of appointment or sequestration remains in force undismissed, unstayed or unvacated for a period of 90 days after the date of entry thereof; (i) a petition against Company as a debtor in a case under the federal bankruptcy laws or other insolvency laws (as in effect at such time) is filed and not withdrawn or dismissed within 90 days thereafter, or if, under the provisions of any law providing for reorganization or winding-up of corporations that may apply to Company, any court of competent jurisdiction assumes jurisdiction, custody or control of Company or of any substantial part of its property and such jurisdiction, custody or control remains in force unrelinquished, unstayed or unterminated for a period of 90 days; or (j) any amount in respect of the Equipment Notes or Related Equipment Notes, including any payment of principal amount of, Make-Whole Amount, if any, Break -24- Amount, if any, or interest on, any Equipment Note or any Related Equipment Note has not been paid in full on the Final Payment Date; provided, however, that notwithstanding anything to the contrary contained in this Section 4.01, any failure of Company to perform or observe any covenant, condition or agreement shall not constitute an Event of Default if such failure arises by reason of an event referred to in the definition of "Event of Loss" so long as Company is continuing to comply with all of the terms of Section 7.05. Section 4.02 Remedies. (a) If an Event of Default has occurred and is continuing and so long as the same shall continue unremedied, then and in every such case Loan Trustee may, and upon the written instructions of a Majority in Interest of Noteholders, Loan Trustee shall, do one or more of the following to the extent permitted by, and subject to compliance with the requirements of, applicable law then in effect (provided, however, that during any period the Airframe or any Engine is subject to the CRAF Program and is in possession of or being operated under the direction of the United States government or an agency or instrumentality of the United States, Loan Trustee shall not, on account of any Event of Default, be entitled to exercise or pursue any of the powers, rights or remedies described in this Section 4.02 in such manner as to limit Company's control under this Indenture (or any Permitted Lessee's control under any Lease) of the Airframe or such Engine, unless at least 60 days' (or such lesser period as may then be applicable under the Military Airlift Command Program of the United States government) prior written notice of default hereunder has been given by Loan Trustee by registered or certified mail to Company (and any such Permitted Lessee) with a copy addressed to the Contracting Office Representative or other appropriate person for the Military Airlift Command of the United States Air Force under any contract with Company (or such Permitted Lessee) relating to the Aircraft): (i) declare by written notice to Company all the Equipment Notes to be due and payable, whereupon the aggregate unpaid principal amount of all Equipment Notes then outstanding, together with accrued but unpaid interest thereon, Break Amount, if any, with respect thereto, and other amounts due thereunder (but without Make-Whole Amount), shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived; provided that if an Event of Default referred to in Subsections 4.01(f), (g), (h) or (i) has occurred and is continuing, then and in every such case the unpaid principal amount then outstanding, together with accrued but unpaid interest, Break Amount, if any, with respect thereto, and all other amounts due thereunder (but without Make-Whole Amount) shall immediately and without further act become due and payable without presentment, demand, protest or other notice, all of which are hereby waived; and, following such declaration or deemed declaration: (ii) (A) cause Company, upon the demand by notice of Loan Trustee, at Company's expense, to deliver promptly, and Company shall deliver promptly, all or such part of the Airframe or any Engine as Loan Trustee so demands to Loan Trustee or its order, or, if Company has failed to so deliver the Airframe or any Engine after such demand, Loan Trustee, at its option, may enter upon the premises where all or any part of the Airframe or any Engine are located and take immediate possession of and remove the same together with any engine which is not an Engine but which is installed on the -25- Airframe, subject to all of the rights of the owner, lessor, lienor or secured party of such engine; provided that the Airframe with an engine (which is not an Engine) installed thereon may be flown or returned only to a location within the continental United States, and such engine shall be held for the account of any such owner, lessor, lienor, secured party or, if such engine is owned by Company, may at the option of Company with the consent of Loan Trustee (which will not be unreasonably withheld) or at the option of Loan Trustee with the consent of Company (which will not be unreasonably withheld), be exchanged with Company for an Engine in accordance with the provisions of Section 7.05(b); (B) sell all or any part of the Airframe and any Engine at public or private sale, whether or not Loan Trustee at the time has possession thereof, as Loan Trustee may determine, or otherwise dispose of, hold, use, operate, lease to others or keep idle all or any part of the Airframe or such Engine as Loan Trustee, in its sole discretion, determines, all free and clear of any rights or claims of Company, and the proceeds of such sale or disposition shall be applied as set forth in Section 3.03; or (C) exercise any other remedy of a secured party under the Uniform Commercial Code of the State of New York (whether or not in effect in the jurisdiction in which enforcement is sought). Upon every such taking of possession of Collateral under this Section 4.02, Loan Trustee may, from time to time, at the expense of the Collateral, make all such expenditures for maintenance, insurance, repairs, alterations, additions and improvements to and of the Collateral as it deems necessary to cause the Collateral to be in such condition as required by the provisions of this Indenture. In each such case, Loan Trustee may maintain, use, operate, store, insure, lease, control, manage or dispose of the Collateral and may exercise all rights and powers of Company relating to the Collateral as Loan Trustee reasonably deems best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management or disposition of the Collateral or any part thereof as Loan Trustee may reasonably determine; and Loan Trustee shall be entitled to collect and receive directly all tolls, rents, revenues, issues, income, products and profits of the Collateral and every part thereof without prejudice, however, to the rights of Loan Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with Loan Trustee hereunder. Such tolls, rents, revenues, issues, income, products and profits shall be applied to pay the expenses of the use, operation, storage, insurance, leasing, control, management or disposition of the Collateral, and of all maintenance, repairs, replacements, alterations, additions and improvements, and to make all payments that Loan Trustee is required or elects to make, if any, for Taxes, insurance or other proper charges assessed against or otherwise imposed upon the Collateral or any part thereof, and all other payments which Loan Trustee is required or expressly authorized to make under any provision of this Indenture, as well as just and reasonable compensation for the services of Loan Trustee, and shall otherwise be applied in accordance with Article III. If an Event of Default has occurred and is continuing and the Equipment Notes either have been accelerated pursuant to this Section 4.02 or have become due at maturity and Loan Trustee is entitled to exercise rights hereunder, at the request of Loan Trustee, Company shall promptly execute and deliver to Loan Trustee such instruments of title and other documents as Loan Trustee reasonably deems necessary or advisable to enable Loan Trustee or an agent or representative designated by Loan Trustee, at such time or times and place or places as Loan Trustee specifies, to obtain possession of all or any part of the Collateral to which Loan Trustee at the time is entitled hereunder. If Company for any reason fails to execute and deliver such instruments and documents after such request by Loan Trustee, Loan Trustee -26- may obtain a judgment conferring on Loan Trustee the right to immediate possession and requiring Company to execute and deliver such instruments and documents to Loan Trustee, to the entry of which judgment Company hereby specifically consents to the fullest extent it may lawfully do so. All actual and reasonable expenses of obtaining such judgement or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Indenture. (b) Loan Trustee shall give Company at least 30 days' prior written notice of any public sale or of the date on or after which any private sale will be held, which notice Company hereby agrees to the extent permitted by applicable law is reasonable notice. Any Noteholder or Noteholders shall be entitled to bid for and become the purchaser of any Collateral offered for sale pursuant to this Section 4.02 and to credit against the purchase price bid at such sale by such Noteholders all or any part of the unpaid amounts owing to such Noteholders under the Operative Documents and secured by the Lien of this Indenture (but only to the extent that such purchase price would have been paid to such Noteholders pursuant to Article III if such purchase price were paid in cash and the foregoing provision of this Section 4.02(b) were not given effect). Loan Trustee may exercise such right without possession or production of the Equipment Notes or proof of ownership thereof, and as a representative of Noteholders may exercise such right without notice to Noteholders as parties to any suit or proceeding relating to the foreclosure of any Collateral. Company may also bid for and become the purchaser of any Collateral offered for sale pursuant to this Section 4.02. (c) To the extent permitted by applicable law, while an Event of Default has occurred and is continuing, Company irrevocably appoints Loan Trustee the true and lawful attorney-in-fact of Company (which appointment is coupled with an interest) in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Indenture, whether pursuant to foreclosure or power of sale, or otherwise, to execute and deliver all such bills of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, Company hereby ratifying and confirming all that such attorney or any substitute does by virtue hereof in accordance with applicable law; provided that if so requested by Loan Trustee or any purchaser, Company shall ratify and confirm any such sale, assignment or transfer of delivery, by executing and delivering to Loan Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. (d) At any time after Loan Trustee has declared the unpaid principal amount of all Equipment Notes then outstanding to be due and payable and prior to the sale of any part of the Collateral pursuant to this Article IV, a Majority in Interest of Noteholders, by written notice to Company and Loan Trustee, may rescind and annul such declaration, whether made by Loan Trustee on its own accord or as directed, and its consequences if: (i) there has been paid to or deposited with Loan Trustee an amount sufficient to pay all overdue installments of principal amount of, and interest on, the Equipment Notes, and all other amounts owing under the Operative Documents, that have become due otherwise than by such declaration of acceleration and (ii) all other Events of Default, other than nonpayment of principal amount or interest on the Equipment Notes that have become due solely because of such acceleration, have been either cured or waived; provided, that no such recission or annulment shall extend to or affect any subsequent default or Event of Default or impair any right consequent thereon. -27- (e) Notwithstanding anything contained herein, so long as Pass Through Trustee under any Pass Through Trust Agreement or Subordination Agent on its behalf is a Noteholder, Loan Trustee will not be authorized or empowered to acquire title to any Collateral or take any action with respect to any Collateral so acquired by it if such acquisition or action would cause any Pass Through Trust to fail to qualify as a "grantor trust" for federal income tax purposes. Section 4.03 Remedies Cumulative. To the extent permitted under applicable law, each and every right, power and remedy specifically given to Loan Trustee herein or otherwise in this Indenture shall be cumulative and shall be in addition to every other right, power and remedy specifically given herein or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically given herein or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by Loan Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by Loan Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall, to the extent permitted by applicable law, impair any such right, power or remedy or be construed to be a waiver of any default on the part of Company or to be an acquiescence therein. Section 4.04 Discontinuance of Proceedings. In case Loan Trustee has instituted any proceedings to enforce any right, power or remedy under this Indenture by foreclosure, entry or otherwise, and such proceedings have been discontinued or abandoned for any reason or have been determined adversely to Loan Trustee, then and in every such case Company and Loan Trustee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Collateral, and all rights, remedies and powers of Loan Trustee shall continue as if no such proceedings had been undertaken (but otherwise without prejudice). Section 4.05 Waiver of Past Defaults. Upon written instruction from a Majority in Interest of Noteholders, Loan Trustee shall waive any past default hereunder and its consequences, and upon any such waiver such default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of the Operative Documents, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon; provided, however, that in the absence of written instructions from each of the affected Noteholders, Loan Trustee shall not waive any default (i) in the payment of the principal amount, Make-Whole Amount, if any, Break Amount, if any, or interest due under any Equipment Note then outstanding (other than with the consent of the holder thereof), or (ii) in respect of a covenant or provision hereof which, under Article IX, cannot be modified or amended without the consent of each such affected Noteholder. Section 4.06 Noteholders May Not Bring Suit Except Under Certain Conditions. A Noteholder of any Series shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise with respect to this Indenture for the appointment of a receiver or for the enforcement of any other remedy under this Indenture, unless: -28- (1) such Noteholder previously shall have given written notice to Loan Trustee of a continuing Event of Default; (2) A Majority in Interest of Noteholders shall have requested Loan Trustee in writing to institute such action, suit or proceeding and shall have offered to Loan Trustee indemnity as provided in Section 5.03; (3) Loan Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no direction inconsistent with such written request shall have been given to Loan Trustee during such 60-day period by a Majority in Interest of Noteholders. Except to the extent provided in the Intercreditor Agreement or in any Indenture Supplement, it is understood and intended that no one or more of Noteholders of any Series shall have any right in any manner whatsoever hereunder or under the Indenture Supplement or under the Equipment Notes of such Series to (i) surrender, impair, waive, affect, disturb or prejudice any Collateral, or the Lien of the Indenture on any Collateral, or the rights of Noteholders of such Series, (ii) obtain or seek to obtain priority over or preference with respect to any other such Noteholder of such Series or (iii) enforce any right under this Indenture, except in the manner provided in this Indenture and for the equal, ratable and common benefit of all Noteholders of such Series subject to the provisions of this Indenture. Section 4.07 Appointment of a Receiver. Loan Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be Loan Trustee or any successor or nominee thereof) for all or any part of the Collateral, whether such receivership be incidental to a proposed sale of the Collateral or the taking of possession thereof or otherwise, and Company hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Collateral shall be entitled to exercise all the rights and powers of Loan Trustee with respect to the Collateral. Section 4.08 Rights of Noteholders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Noteholder to receive payment of principal of, and premium, if any, and interest on an Equipment Note on or after the respective due dates expressed in such Equipment Note, shall not be impaired or affected without the consent of such Noteholder. ARTICLE V DUTIES OF LOAN TRUSTEE Section 5.01 Notice of Event of Default. If Loan Trustee has knowledge of an Event of Default or of a default arising from a failure by Company to pay when due any payment of principal amount, interest on, Break Amount, if any, or Make-Whole Amount, if any, due and payable under any Equipment Note, Loan Trustee shall promptly give notice thereof to Company, Policy Provider, the Primary Liquidity Provider and each Noteholder. Subject to the -29- terms of Sections 4.02, 4.05, 5.02 and 5.03, Loan Trustee shall take such action, or refrain from taking such action, with respect to such default or Event of Default (including with respect to the exercise of any rights or remedies hereunder) as Loan Trustee is instructed in writing by a Majority in Interest of Noteholders. Subject to the provisions of Section 5.03, if Loan Trustee does not receive instructions as above provided within 20 Business Days after giving notice of such default or Event of Default to Noteholders, Loan Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action with respect to such default or Event of Default as it reasonably determines to be advisable in the best interests of Noteholders, but shall be under no duty to take or refrain from taking any action. It shall use the same degree of care and skill in connection therewith as a prudent person would use under the circumstances in the conduct of his or her own affairs. Loan Trustee may not sell the Airframe or any Engine without the consent of a Majority in Interest of Noteholders. For all purposes of this Indenture, in the absence of actual knowledge, Loan Trustee shall not be deemed to have knowledge of a default or an Event of Default unless notified in writing by Company or one or more Noteholders; and "actual knowledge" (as used in the foregoing clause) of Loan Trustee shall mean actual knowledge of an officer in the Corporate Trust Division of Loan Trustee; provided, however, that Loan Trustee is deemed to have actual knowledge of (i) the failure of Company to pay any principal amount of, or interest on, the Equipment Notes directly to Loan Trustee when the same shall become due or (ii) the failure of Company to maintain insurance as required under Section 7.06 if Loan Trustee receives written notice thereof from an insurer or insurance broker. Section 5.02 Action upon Instructions; Certain Rights and Limitations. Subject to the terms of Article IV and this Article V, upon the written instructions at any time of a Majority in Interest of Noteholders, Loan Trustee shall promptly (i) give such notice, direction, consent, waiver or approval or exercise such right, remedy or power hereunder in respect of all or any part of the Collateral or (ii) take such other action, as is specified in such instructions. Loan Trustee will cooperate with Company in connection with the recording, filing, re-recording and refiling of the Indenture and any supplements to it and any financing statements or other documents as is necessary to maintain the perfection hereof or otherwise protect the security interests created hereby. Loan Trustee shall furnish to Company upon request such information and copies of such documents as Loan Trustee may have and as are necessary for Company to perform its duties under Article II hereof. Section 5.03 Indemnification. Loan Trustee shall not be required to take any action or refrain from taking any action under Sections 5.01 (other than the first sentence thereof) or 5.02 or Article IV unless it shall have received indemnification against any risks incurred in connection therewith in form and substance reasonably satisfactory to it, including, without limitation, adequate advances against costs that may be incurred by it in connection therewith. Loan Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV, nor shall any other provision of any Operative Document be deemed to impose a duty on Loan Trustee to take any action, if Loan Trustee shall have been advised by outside counsel that such action is contrary to the terms hereof or is otherwise contrary to law. -30- Section 5.04 No Duties Except as Specified in Indenture or Instructions. Loan Trustee shall not have any duty or obligation to manage, control, lease, use, sell, operate, store, dispose of or otherwise deal with the Aircraft or any other part of the Collateral, or to otherwise take or refrain from taking any action under, or in connection with, this Indenture, except as expressly provided by the terms of this Indenture or the Participation Agreement or as expressly provided in written instructions received pursuant to the terms of Section 5.01 or 5.02; and no implied duties or obligations shall be read into this Indenture against Loan Trustee. Section 5.05 No Action Except under Indenture or Instructions. Loan Trustee will not manage, control, use, sell, lease, operate, store, dispose of or otherwise deal with the Aircraft or any other part of the Collateral except in accordance with the powers granted to, or the authority conferred upon, Loan Trustee pursuant to this Indenture and in accordance with the express terms hereof. Section 5.06 Investment of Amounts Held by Loan Trustee. Any monies (including for the purpose of this Section 5.06 any cash deposited with Loan Trustee by Company, any cash received by Loan Trustee pursuant to Sections 7.05(c) or 7.06(d) or otherwise) or Permitted Investments purchased by the use of such cash pursuant to this Section 5.06 or any cash constituting the proceeds of the maturity, sale or other disposition of any Permitted Investments) held by Loan Trustee hereunder as part of the Collateral, until paid out by Loan Trustee as herein provided, (i) subject to clause (ii) below, may be carried by Loan Trustee on deposit with itself or on deposit to its account with any bank, trust company or national banking association incorporated or doing business under the laws of the United States or one of the states thereof having combined capital and surplus and retained earnings of a least $100,000,000, and Loan Trustee shall not have any liability for interest upon any such monies except as otherwise agreed in writing with Company, or (ii) at any time and from time to time, so long as no Event of Default shall have occurred and be continuing, at the request of Company, shall be invested and reinvested in Permitted Investments as specified in such request (if such investments are reasonably available for purchase) and sold, in any case at such prices, including accrued interest or its equivalent, as are set forth in such request, and such Permitted Investments shall be held by Loan Trustee in trust as part of the Collateral until so sold; provided that Company shall upon demand pay to Loan Trustee the amount of any loss realized upon maturity, sale or other disposition of any such Permitted Investment and, so long as no Event of Default or Payment Default shall have occurred and be continuing, Company shall be entitled to receive from Loan Trustee, and Loan Trustee shall promptly pay to Company, any profit, income, interest, dividend or gain realized upon maturity, sale or other disposition of any Permitted Investment. If an Event of Default or Payment Default shall have occurred and be continuing, any net income, profit, interest, dividend or gain realized upon maturity, sale or other disposition of any Permitted Investment shall be held as part of the Collateral and shall be applied by Loan Trustee at the same time, on the same conditions and in the same manner as the amounts in respect of which such income, profit, interest, dividend or gain was realized are required to be distributed in accordance with the provisions hereof pursuant to which such amounts were required to be held. Loan Trustee shall not be responsible for any losses on any investments or sales of Permitted Investments made pursuant to the procedure specified in this Section 5.06 other than by reason of its willful misconduct or negligence. If any moneys or investments are held by Loan Trustee solely because an Event of Default has occurred and is continuing and such moneys or investments have been held for a period of 90 consecutive days during which such -31- Event of Default is continuing without any remedial action being taken by Loan Trustee (it being expressly understood that such remedial action includes any declaration of acceleration of the Equipment Notes) in respect of such Event of Default pursuant to Section 4.02 hereof, and provided that there is no stay, moratorium or injunction in effect preventing the taking of such action, then, notwithstanding any other provision of the Operative Documents, all such moneys and investments held by Loan Trustee shall be released to Company on such 90th day, or on the next Business Day after such 90th day. ARTICLE VI LOAN TRUSTEE Section 6.01 Acceptance of Trusts and Duties. U.S. Bank accepts the trusts and duties hereby created and applicable to it and agrees to perform such duties, but only upon the terms of this Indenture and agrees to receive, handle and disburse all monies received by it as Loan Trustee constituting part of the Collateral in accordance with the terms hereof. U.S. Bank shall have no liability hereunder except (a) for its own willful misconduct or negligence, (b) as provided in the fourth sentence of Section 2.03 and the penultimate sentence of Section 5.06, (c) for liabilities that may result from the inaccuracy of any representation or warranty of U.S. Bank in the Participation Agreement or expressly made hereunder and (d) as otherwise expressly provided in the Operative Documents. Section 6.02 Absence of Certain Duties. Except in accordance with written instructions furnished pursuant to Sections 5.01, 5.02 or 6.06, and except as provided in, and without limiting the generality of, Sections 5.02, 5.03 and 5.04, Loan Trustee shall have no duty (a) to see to any registration of the Aircraft or any recording or filing of this Indenture or any other document, or to see to the maintenance of any such registration, recording or filing, (b) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Company is in default with respect thereto, (c) to confirm, verify or inquire into the failure to receive any financial statements of Company or (d) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Company's covenants hereunder with respect to the Aircraft. Section 6.03 No Representations or Warranties as to the Documents. Except as provided in Article 5 of the Participation Agreement, Loan Trustee shall not be deemed to have made any representation or warranty as to the validity, legality or enforceability of any Operative Document or any other document or instrument, or as to the correctness of any statement (other than a statement by Loan Trustee) contained herein or therein, except that Loan Trustee hereby represents and warrants that each of said specified documents to which it is a party has been or will be duly executed and delivered by one of its officers who is and will be duly authorized to execute and deliver such document on its behalf. Section 6.04 No Segregation of Monies; No Interest. Subject to Section 5.06 hereof, all moneys received by Loan Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by mandatory provisions of law, and neither Loan Trustee nor any agent of Loan Trustee shall be under any liability for interest on any moneys -32- received by it hereunder; provided, however, that any payments received, or applied hereunder, by Loan Trustee shall be accounted for by Loan Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. Section 6.05 Reliance; Agents; Advice of Counsel. Loan Trustee shall not incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Loan Trustee may accept a copy of a resolution of the Board of Directors of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary of such party as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, Loan Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Company, as to such fact or matter, and such certificate shall constitute full protection to Loan Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. In the administration of the trusts hereunder, Loan Trustee may, (a) execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents (including paying agents or registrars) or attorneys, and (b) at the expense of the Collateral, consult with counsel, accountants and other skilled Persons to be selected and retained by it. Loan Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled Persons acting within such counsel's, accountants' or Person's area of competence (so long as Loan Trustee shall have exercised reasonable care and judgment in selecting such Persons). Section 6.06 Instructions from Noteholders. In the administration of the trusts created hereunder, Loan Trustee shall have the right to seek instructions from a Majority in Interest of Noteholders should any provision of this Indenture appear to conflict with any other provision herein or any other Operative Document or Pass Through Document or should Loan Trustee's duties or obligations hereunder be unclear, and Loan Trustee shall incur no liability in refraining from acting until it receives such instructions. Loan Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.06. ARTICLE VII OPERATING COVENANTS OF COMPANY Section 7.01 Liens. Company will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to the Aircraft, its title thereto or any of its interest therein, except: (a) the rights of Loan Trustee as provided in the Operative Documents, the Lien of this Indenture, the rights of any Permitted Lessee under a Lease permitted hereunder; (b) the rights of others under agreements or arrangements to the extent expressly permitted by this Indenture; -33- (c) Loan Trustee Liens, Noteholder Liens and Other Party Liens; (d) Liens for Taxes either not yet due or payable or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk of the sale, forfeiture or loss of the Airframe or any Engine or Loan Trustee's interest therein or impair the Lien of this Indenture; (e) materialmen's, mechanics', workers', repairmen's, employees' or other like Liens arising in the ordinary course of business (including those arising under maintenance agreements entered into in the ordinary course of business) securing obligations that either are not yet overdue for a period of more than 60 days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk of the sale, forfeiture or loss of the Airframe or any Engine or Loan Trustee's interest therein or impair the Lien of this Indenture; (f) Liens arising out of any judgment or award, so long as such judgment is, within 60 days after the entry thereof, discharged, vacated or reversed, or execution thereof stayed pending appeal or other judicial review or is discharged, vacated or reversed within 60 days after the expiration of such stay; (g) any other Lien with respect to which Company provides a bond, cash collateral or other security adequate in the reasonable opinion of Loan Trustee; (h) salvage or similar rights of insurers under insurance policies maintained by Company; and (i) Liens approved in writing by Loan Trustee with the consent of a Majority in Interest of Noteholders. Liens described in clauses (a) through (i) above are referred to herein as "Permitted Liens". Company shall promptly, at its own expense, take (or cause to be taken) such action as may be necessary duly to discharge (by bonding or otherwise) any Lien other than a Permitted Lien arising at any time with respect to the Aircraft, its title thereto or any of its interest therein. Section 7.02 Possession, Operation and Use, Maintenance and Registration. (a) Possession. Without the prior written consent of Loan Trustee, Company shall not lease or otherwise in any manner deliver, transfer or relinquish possession of the Airframe or any Engine or install any Engine, or permit any Engine to be installed, on any airframe other than the Airframe; provided that Company (or, except with respect to clauses (viii) and (ix) below, any Permitted Lessee) may without the prior written consent of Loan Trustee: (i) subject the Airframe to interchange agreements or subject any Engine to interchange or pooling agreements or arrangements, in each case entered into by Company (or any Permitted Lessee) in the ordinary course of its business; provided that (A) no such agreement or arrangement contemplates or requires the transfer of title to the Airframe and (B) if Company's title to any such Engine is divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with -34- respect to such Engine, and Company shall (or shall cause any Permitted Lessee to) comply with Section 7.05(b) in respect thereof; (ii) deliver possession of the Airframe or any Engine to any Person for testing, service, repair, restoration, storage, maintenance or other similar purposes or for alterations, modifications or additions to the Airframe or such Engine to the extent required or permitted by the terms hereof; (iii) transfer or permit the transfer of possession of the Airframe or any Engine to any Government pursuant to a lease, contract or other instrument; (iv) subject (or permit any Permitted Lessee to subject) the Airframe or any Engine to the CRAF Program or transfer (or permit any Permitted Lessee to transfer) possession of the Airframe or any Engine to the United States government in accordance with applicable laws, rulings, regulations or orders (including, without limitation, any transfer of possession pursuant to the CRAF Program); provided, that Company (or any Permitted Lessee) (A) shall promptly notify Loan Trustee upon transferring possession of the Airframe or any Engine pursuant to this clause (iv) and (B) in the case of a transfer of possession pursuant to the CRAF Program, shall notify Loan Trustee of the name and address of the responsible Contracting Office Representative for the Military Airlift Command of the United States Air Force or other appropriate Person to whom notices must be given and to whom requests or claims must be made to the extent applicable under the CRAF Program; (v) install an Engine on an airframe owned by Company (or any Permitted Lessee) free and clear of all Liens, except (A) Permitted Liens and Liens that apply only to the engines (other than Engines), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to the airframe as an entirety) and (B) the rights of third parties under interchange agreements or pooling or similar arrangements that would be permitted under clause (i) above; (vi) install an Engine on an airframe leased to Company (or any Permitted Lessee) or purchased or owned by Company (or any Permitted Lessee) subject to a conditional sale or other security agreement; provided that: (A) such airframe is free and clear of all Liens except (1) the rights of the parties to the lease or conditional sale or other security agreement covering such airframe, or their successors and assigns, and (2) Liens of the type permitted by clause (v) of this Section 7.02(a); and (B) either: (1) Company has obtained from the lessor or secured party of such airframe a written agreement (which may be the lease, conditional sale or other security agreement covering such airframe), in form and substance satisfactory to Loan Trustee (an agreement from such lessor or secured party substantially in the form of the penultimate paragraph of this Section 7.02(a) being deemed to be satisfactory to Loan Trustee), whereby such lessor or secured party expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in any Engine by reason of such Engine being installed on such airframe at any time while such Engine is subject to the Lien of this Indenture, or (2) such lease, conditional sale or other security agreement provides that such Engine shall -35- not become subject to the Lien of such lease, conditional sale or other security agreement at any time while such Engine is subject to the Lien of this Indenture, notwithstanding its installation on such airframe; (vii) install an Engine on an airframe owned by Company (or any Permitted Lessee), leased to Company (or any Permitted Lessee) or purchased by Company (or any Permitted Lessee) subject to a conditional sale or other security agreement under circumstances where neither clause (v) nor clause (vi) of this Section 7.02(a) is applicable; provided that such installation shall be deemed an Event of Loss with respect to such Engine, and Company shall comply with Section 7.05(b) in respect thereof, if such installation adversely affects Loan Trustee's security interest in such Engine, Loan Trustee not intending hereby to waive any right or interest it may have to or in such Engine under applicable law until compliance by Company with Section 7.05(b); (viii) lease any Engine or the Airframe and Engines to any United States air carrier as to which there is in force a certificate issued pursuant to the Transportation Code (49 U.S.C. Sections 41101-41112) or successor provision that gives like authority; provided that no Event of Default exists at the time such lease is entered into; and (ix) lease any Engine or the Airframe and Engines to (A) any foreign air carrier other than those set forth in clause (B), (B) any foreign air carrier that is at the inception of the lease based in and a domiciliary of a country listed in Exhibit B hereto, (C) the manufacturer of the Airframe or any Engine (either directly or through an affiliate) and (D) any foreign air carrier consented to in writing by Loan Trustee with the consent of a Majority in Interest of Noteholders; provided that (v) no Event of Default exists at the time such lease is entered into, (w) in the case of a lease to a foreign air carrier under clause (A) above, Loan Trustee receives at the time of such lease (1) written confirmation from each of the Rating Agencies that such lease would not result in a reduction of the rating for any class of Pass Through Certificates below the then current rating for such class of Pass Through Certificates or a withdrawal or suspension of the rating of any class of Pass Through Certificates, without regard to the Policy (as defined in the Policy Provider Agreement) and (2) an opinion of counsel to Company (such counsel to be reasonably satisfactory to Loan Trustee) to the effect that there exist no possessory rights in favor of the lessee under the laws of such lessee's country which would, upon bankruptcy or insolvency of or other default by Company and assuming at such time such lessee is not insolvent or bankrupt, prevent the taking of possession of any such Engine or the Airframe and any such Engine by Loan Trustee in accordance with and when permitted by the terms of Section 4.02 upon the exercise by Loan Trustee of its remedies under Section 4.02, (x) in the case of a lease to any foreign air carrier (other than a foreign air carrier principally based in Taiwan), the United States maintains normal diplomatic relations with the country in which such foreign air carrier is based at the time such lease is entered into and in the case of a lease to a foreign air carrier principally based in Taiwan, the United States maintains diplomatic relations with Taiwan at least as good as those on the Closing Date, (y) in the case of a lease to any foreign air carrier, Company furnishes Loan Trustee with a certificate from a Responsible Officer of Company certifying that there exist no possessory rights in favor of such lessee under the laws of such lessee's country which would, upon bankruptcy or insolvency of or other -36- default by Company, and assuming at such time such lessee is not insolvent or bankrupt, prevent the taking of possession of any such Engine or the Airframe and any such Engine by Loan Trustee in accordance with and when permitted by the terms of Section 4.02 upon the exercise by Loan Trustee of its remedies under Section 4.02, and (z) in the case of any lease to a foreign air carrier, such carrier is not then subject to any bankruptcy, insolvency, liquidation, reorganization, dissolution or similar proceeding and shall not have substantially all of its property in the possession of any liquidator, trustee, receiver or similar person; provided that the rights of any lessee or other transferee who receives possession of the Aircraft, the Airframe or any Engine by reason of a transfer permitted by this Section 7.02(a) (other than the transfer of an Engine which is deemed an Event of Loss) shall be subject and subordinate to, and any permitted lease shall be made expressly subject and subordinate to, all the terms of this Indenture, including Loan Trustee's rights to repossess pursuant to Section 4.02 and to avoid such lease upon such repossession, and Company shall remain primarily liable hereunder for the performance and observance of all of the terms and conditions of this Indenture to the same extent as if such lease or transfer had not occurred, any such lease shall include appropriate provisions for the maintenance and insurance of the Aircraft, the Airframe or such Engine, and no lease or transfer of possession otherwise in compliance with this Section shall (x) result in any registration or re-registration of the Aircraft except to the extent permitted in Section 7.02(e) or the maintenance, operation or use thereof that does not comply with Section 7.02(b) and (c) or (y) permit any action not permitted to be taken by Company with respect to the Aircraft hereunder. Company shall promptly notify Loan Trustee and the Rating Agencies of the existence of any such lease with a term in excess of one year. Loan Trustee, each Noteholder by acceptance of an Equipment Note, and each Related Noteholder by acceptance of a Related Equipment Note agrees, for the benefit of Company (and any Permitted Lessee) and for the benefit of the lessor or secured party of any airframe or engine leased to Company (or any Permitted Lessee) or purchased or owned by Company (or any Permitted Lessee) subject to a conditional sale or other security agreement, that Loan Trustee, Noteholders and Related Noteholders will not acquire or claim, as against Company (or any Permitted Lessee) or such lessor or secured party, any right, title or interest in: (A) any engine or engines owned by Company (or any Permitted Lessee) or by the lessor under such lease or subject to a security interest in favor of the secured party under such conditional sale or other security agreement as the result of such engine or engines being installed on the Airframe, or (B) any airframe owned by Company (or any Permitted Lessee) or by the lessor under such lease or subject to a security interest in favor of the secured party under such conditional sale or other security agreement as the result of any Engine being installed on such airframe. Loan Trustee acknowledges that any "wet lease" or other similar arrangement under which Company (or any Permitted Lessee) maintains operational control of the Aircraft does not constitute a delivery, transfer or relinquishment of possession for purposes of this Section 7.02(a). (b) Operation and Use. Company agrees that the Aircraft will not be maintained, used or operated in violation of any law, rule or regulation of any government of any -37- country having jurisdiction over the Aircraft or in violation of any airworthiness certificate, license or registration relating to the Aircraft issued by any such government, except to the extent Company (or, if a Lease is then in effect, any Permitted Lessee) is contesting in good faith the validity or application of any such law, rule or regulation in any manner that does not involve any material risk of sale, forfeiture or loss of the Aircraft or impair the Lien of this Indenture; provided, that Company shall not be in default under, or required to take any action set forth in, this sentence if it is not possible for it to comply with the laws of a jurisdiction other than the United States (or other than any jurisdiction in which the Aircraft is then registered) because of a conflict with the applicable laws of the United States (or such jurisdiction in which the Aircraft is then registered). Company will not operate the Aircraft, or permit the Aircraft to be operated or located, (i) in any area excluded from coverage by any insurance required by the terms of Section 7.06 or (ii) in any war zone or recognized or, in Company's judgment, threatened areas of hostilities unless covered by war risk insurance in accordance with Section 7.06, unless in the case of either clause (i) or (ii), (x) government indemnification complying with Section 7.06 (a) and (b) has been provided or (y) the Aircraft is only temporarily located in such area as a result of an isolated occurrence or isolated series of occurrences attributable to a hijacking, medical emergency, equipment malfunction, weather conditions, navigational error or other similar unforeseen circumstances and Company is using its good faith efforts to remove the Aircraft from such area as promptly as practicable. (c) Maintenance. Company shall maintain, service, repair and overhaul the Aircraft (or cause the same to be done) (i) so as to keep the Aircraft in good operating condition and in such condition as may be necessary to enable the airworthiness certification of the Aircraft to be maintained in good standing at all times (other than during temporary periods of storage, during maintenance, testing or modification permitted hereunder, or during periods of grounding by applicable governmental authorities) under the Transportation Code, during such periods in which the Aircraft is registered under the laws of the United States, or, if the Aircraft is registered under the laws of any other jurisdiction, the applicable laws of such jurisdiction and (ii) using the same standards as Company (or a Permitted Lessee, if a Lease is in effect) uses with respect to similar aircraft operated by Company (or such Permitted Lessee) in similar circumstances (it being understood that the obligations pursuant to this clause (ii) do not limit Company's obligations under the preceding clause (i)). In any case, the Aircraft will be maintained in accordance with the maintenance standards required by the FAA (while operated under an FAA-approved maintenance program) or, while operated under the maintenance program of another jurisdiction, standards substantially equivalent to those required by the central aviation authority of Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland or the United Kingdom. Company shall maintain or cause to be maintained all records, logs and other documents required to be maintained in respect of the Aircraft by appropriate authorities in the jurisdiction in which the Aircraft is registered. (d) Identification of Loan Trustee's Interest. Company agrees to affix as promptly as practicable after the Closing Date and thereafter to maintain in the cockpit of the Aircraft, in a clearly visible location, and (if not prevented by applicable law or regulations or by any government) on each Engine, a nameplate bearing the inscription "MORTGAGED TO U.S. BANK TRUST NATIONAL ASSOCIATION, AS LOAN TRUSTEE" (such nameplate to be replaced, if necessary, with a nameplate reflecting the name of any successor Loan Trustee). -38- (e) Registration. Company shall cause the Aircraft to remain duly registered, under the laws of the United States, in the name of Company except as otherwise required by the Transportation Code; provided that Loan Trustee shall, at Company's expense, execute and deliver all such documents as Company may reasonably request for the purpose of continuing such registration. Notwithstanding the preceding sentence, Company, at its own expense, may cause or allow the Aircraft to be duly registered under the laws of any foreign jurisdiction in which a Permitted Lessee could be principally based, in the name of Company or of any nominee of Company, or, if required by applicable law, in the name of any other Person (and, following any such foreign registration, may cause the Aircraft to be re-registered under the laws of the United States); provided, that in the case of jurisdictions other than those approved by Loan Trustee with the consent of a Majority in Interest of Noteholders (i) if such jurisdiction is at the time of registration listed on Exhibit B, Loan Trustee and Policy Provider shall have received at the time of such registration an opinion of counsel to Company reasonably satisfactory to Loan Trustee to the effect that (A) this Indenture and Loan Trustee's right to repossession thereunder is valid and enforceable under the laws of such country, (B) after giving effect to such change in registration, the Lien of this Indenture shall continue as a valid first priority Lien and shall be duly perfected in the new jurisdiction of registration and that all filing, recording or other action necessary to perfect and protect the Lien of this Indenture has been accomplished (or if such opinion cannot be given at such time, (x) the opinion shall detail what filing, recording or other action is necessary and (y) Loan Trustee and Policy Provider shall have received a certificate from a Responsible Officer of Company that all possible preparations to accomplish such filing, recording and other action shall have been done, and such filing, recording and other action shall be accomplished and a supplemental opinion to that effect shall be promptly delivered to Loan Trustee subsequent to the effective date of such change in registration), (C) the obligations of Company under this Indenture shall remain valid, binding and (subject to customary bankruptcy and equitable remedies exceptions and to other exceptions customary in foreign opinions generally) enforceable under the laws of such jurisdiction (or the laws of the jurisdiction to which the laws of such jurisdiction would refer as the applicable governing law), (D) all approvals or consents of any government in such jurisdiction having jurisdiction required for such change in registration shall have been duly obtained and shall be in full force and effect and (E) (unless Company shall have agreed to provide insurance covering the risk of requisition of use or title of the Aircraft by the government of such jurisdiction so long as the Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use or title of the Aircraft in the event of requisition by such government of such use or title, and (ii) if such jurisdiction is at the time of registration not listed on Exhibit B, Loan Trustee shall have received (in addition to the opinions set forth in clause (i) above) at the time of such registration an opinion of counsel to Company reasonably satisfactory to Loan Trustee to the effect that (A) the terms of this Indenture are legal, valid, binding and enforceable in such jurisdiction (subject to exceptions customary in such jurisdiction, provided, that, subject to exceptions relating to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and exceptions relating to general principles of equity, such counsel shall opine that any applicable laws limiting the remedies provided in Section 4.02 do not in the opinion of such counsel make the remedies provided in Section 4.02 inadequate for the practical realization of the rights and benefits provided thereby), (B) it is not necessary for Loan Trustee to register or qualify to do business in such jurisdiction and (C) there is no tort -39- liability of the lender of an aircraft not in possession thereof under the laws of such jurisdiction other than tort liability that might have been imposed on such lender under the laws of the United States or any state thereof (it being understood that such opinion shall be waived if insurance reasonably satisfactory to Loan Trustee is provided, at Company's expense, to cover such risk). Loan Trustee will cooperate with Company in effecting such foreign registration. Notwithstanding the foregoing, prior to any such change in the country of registry of the Aircraft, the following conditions shall be met (or waived as provided in Section 6.01(b) of the Participation Agreement): (i) no Event of Default shall have occurred and be continuing at the effective date of the change in registration; provided, that it shall not be necessary to comply with this condition if the change in registration results in the registration of the Aircraft under the laws of the United States or if a Majority in Interest of Noteholders consents to such change in registration; (ii) Loan Trustee shall have received evidence of compliance with the insurance provisions contained herein after giving effect to such change in registration; (iii) other than in the case of a change in registration to Taiwan, the proposed change in registration is made to a country with which the United States then maintains normal diplomatic relations, and in the case of a change in registration to Taiwan, the United States maintains diplomatic relations with Taiwan at least as good as those on the Closing Date; (iv) the indemnities in favor of each Person named as an indemnitee under any other Operative Document afford each such Person substantially the same protection as provided prior to such change of registration (or Company shall have agreed upon additional indemnities that, together with such original indemnities, to the reasonable satisfaction of Loan Trustee, afford such protection); and (v) Company shall have paid or made provision reasonably satisfactory to Loan Trustee for the payment of all reasonable expenses (including reasonable attorneys' fees) of Loan Trustee and Noteholders in connection with such change in registration. Section 7.03 Inspection; Financial Information. (a) Inspection. At all reasonable times, but upon at least 15 Business Days' prior written notice to Company, Policy Provider or Loan Trustee or their respective authorized representatives may, subject to the other conditions of this Section 7.03(a), inspect the Aircraft and may inspect the books and records of Company relating to the maintenance of the Aircraft required to be maintained by the FAA or the government of another jurisdiction in which the Aircraft is then registered; provided, that (i) Policy Provider or Loan Trustee or their respective representatives, as the case may be, shall be fully insured at no cost to Company in a manner satisfactory to Company with respect to any risks incurred in connection with any such inspection or shall provide to Company a written release satisfactory to Company with respect to such risks, (ii) any such inspection shall be during Company's normal business hours and subject to the safety, security and workplace rules applicable at the location where such inspection is conducted and any applicable governmental rules or regulations, (iii) any such inspection of the Aircraft shall be a visual, walk-around -40- inspection of the interior and exterior of the Aircraft and shall not include opening any panels, bays or the like without Company's express consent, which consent Company may in its sole discretion withhold, and (iv) no exercise of such inspection right shall interfere with the use, operation or maintenance of the Aircraft by, or the business of, Company and Company shall not be required to undertake or incur any additional liabilities in connection therewith. All information obtained in connection with any such inspection of the Aircraft and of such books and records shall be Confidential Information and shall be treated by Policy Provider and Loan Trustee and their respective representatives in accordance with the provisions of Section 10.16. Any inspection pursuant to this Section 7.03(a) shall be at the sole risk (including, without limitation, any risk of personal injury or death) and expense of Policy Provider or Loan Trustee (or their respective representatives) making such inspection. Except during the continuance of an Event of Default, all inspections by Policy Provider and Loan Trustee and their respective representatives provided for under this Section 7.03(a) shall be limited to one inspection of any kind contemplated by this Section 7.03(a) during any consecutive twelve month period. (b) Financial Information. So long as any of the Secured Obligations remain unpaid, Company agrees to furnish to Loan Trustee and Policy Provider: (i) within 60 days after the end of each of the first three quarterly periods in each fiscal year of Company, either (x) a consolidated balance sheet of Company and its consolidated subsidiaries prepared by it as of the close of such period, together with the related consolidated statements of income for such period or (y) a report of Company on Form 10-Q in respect of such period in the form filed with the Securities and Exchange Commission and (ii) within 120 days after the close of each fiscal year of Company, either (x) a consolidated balance sheet of Company and its consolidated subsidiaries as of the close of such fiscal year, together with the related consolidated statements of income for such fiscal year, certified by independent public accountants, or (y) a report of Company on Form 10-K in respect of such year in the form filed with the Securities and Exchange Commission. Company may fulfill the requirements of this Section 7.03(b) by providing the material described above in an electronic format by electronic mail or accessible over the Internet. Section 7.04 Replacement and Pooling of Parts; Alterations, Modifications and Additions; Substitution of Engines. (a) Replacement of Parts. Company shall promptly replace or cause to be replaced all Parts incorporated or installed in or attached to the Airframe or any Engine and that become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered permanently unfit for use for any reason, except as otherwise provided in Section 7.04(c) or if the Airframe or an Engine to which a Part relates has suffered an Event of Loss. In addition, Company (or any Permitted Lessee) may remove in the ordinary course of maintenance, service, repair, overhaul or testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered permanently unfit for use; provided that Company (or any Permitted Lessee), except as otherwise provided in Section 7.04(c), will replace such Parts as promptly as practicable. All replacement Parts shall be free and clear of all Liens (except for Permitted Liens and except in the case of replacement property temporarily installed on an emergency basis) and shall be in the condition and repair required to be maintained by the terms hereof. Except as otherwise provided in Section 7.04(c), any Parts removed from the Airframe or any Engine shall remain subject to the Lien of this Indenture no matter where located until it is replaced by a part incorporated or installed in or attached to the Airframe or such Engine that meets the requirements for replacement Parts specified above. -41- Immediately upon any replacement Part becoming incorporated or installed in or attached to the Airframe or any Engine as above provided (except in the case of replacement property temporarily installed on an emergency basis), without further act, (i) the replaced Part shall thereupon be free and clear of all rights of Loan Trustee and of the Lien of this Indenture and shall no longer be deemed a Part hereunder, and (ii) such replacement Part shall become subject to the Lien of this Indenture and be deemed a Part of the Airframe or such Engine for all purposes to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine. Upon request of Company from time to time, Loan Trustee shall execute and deliver to Company an appropriate instrument confirming the release of any such replaced Part from the Lien of this Indenture. (b) Pooling of Parts. Any Part removed from the Airframe or any Engine as provided in Section 7.04(a) may be subjected by Company or a Person permitted to be in possession of the Aircraft to a pooling arrangement entered into in the ordinary course of Company's or such Person's business; provided that the part replacing such removed Part shall be incorporated or installed in or attached to the Airframe or such Engine in accordance with Section 7.04(a) as promptly as practicable after the removal of such removed Part. In addition, any replacement Part when incorporated or installed in or attached to the Airframe or any Engine may be owned by any third party subject to such a pooling arrangement; provided that Company, at its expense, as promptly thereafter as practicable either (i) causes title to such replacement Part to vest in Company free and clear of all Liens (except Permitted Liens), or (ii) replaces such replacement Part by incorporating or installing in or attaching to the Airframe or such Engine a further replacement Part in the manner contemplated by Section 7.04(a). (c) Alterations, Modifications and Additions. Company will make (or cause to be made) such alterations and modifications in and additions to the Airframe and the Engines as are required from time to time to meet the applicable requirements of the FAA or any applicable government of any other jurisdiction in which the Aircraft is then registered; provided, however, that Company (or, if a Lease is then in effect, any Permitted Lessee) may, in good faith, contest the validity or application of any such requirement in any manner that does not involve any material risk of sale, loss or forfeiture of the Aircraft and does not adversely affect Loan Trustee's interest in the Collateral. In addition, Company (or any Permitted Lessee), at its own expense, may from time to time add further parts or accessories and make or cause to be made such alterations and modifications in and additions to the Airframe or any Engine as Company (or any Permitted Lessee) deems desirable in the proper conduct of its business, including, without limitation, removal (without replacement) of Parts, provided that no such alteration, modification or addition shall materially diminish the value or utility of the Airframe or such Engine below its value or utility immediately prior to such alteration, modification or addition, assuming that the Airframe or such Engine was then in the condition required to be maintained by the terms of this Indenture, except that the value (but not the utility) of the Airframe or any Engine may be reduced by the value of any such Parts that are removed that Company deems obsolete or no longer suitable or appropriate for use on the Airframe or any Engine. All Parts incorporated or installed in or attached or added to the Airframe or any Engine as the result of such alteration, modification or addition shall, without further act, be subject to the Lien of this Indenture. Notwithstanding the foregoing, Company (or any Permitted Lessee) may, at any time, remove any Part from the Airframe or any Engine if such Part: (i) is in addition to, and not in replacement of or substitution for, any Part originally incorporated or installed in or -42- attached to the Airframe or such Engine at the time of delivery thereof to Company or any Part in replacement of, or substitution for, any such Part, (ii) is not required to be incorporated or installed in or attached or added to the Airframe or such Engine pursuant to the first sentence of this Section 7.04(c) and (iii) can be removed from the Airframe or such Engine without materially diminishing the value or utility required to be maintained by the terms of this Indenture that the Airframe or such Engine would have had at such time had such removal not occurred. Upon the removal by Company (or any Permitted Lessee) of any Part as permitted by this Section 7.04(c), such removed Part shall, without further act, be free and clear of all rights and interests of Loan Trustee and the Lien of this Indenture and shall no longer be deemed a Part hereunder. Upon request of Company from time to time, Loan Trustee shall execute and deliver to Company an appropriate instrument confirming the release of any such removed Part from the Lien of this Indenture. (d) Substitution of Engines. Company shall have the right at its option at any time, on at least 30 days' prior written notice to Loan Trustee, to substitute a Replacement Engine for any Engine. In such event, and prior to the date of such substitution, Company shall replace such Engine by complying with the terms of Section 7.05(b) to the same extent as if an Event of Loss had occurred with respect to such Engine. Section 7.05 Loss, Destruction or Requisition. (a) Event of Loss with Respect to the Airframe. Upon the occurrence of an Event of Loss with respect to the Airframe or the Airframe and the Engines then installed thereon, Company shall as soon as practicable (and, in any event, within 30 days after an Event of Loss has occurred) notify Loan Trustee of such Event of Loss, and, within 90 days after such Event of Loss, Company shall give Loan Trustee written notice of its election to perform one of the following options (it being agreed that if Company has not given such notice of election within such 90-day period, Company shall be deemed to have elected to perform the option set forth in the following clause (ii)). Company may elect either to: (i) substitute, on or before the Loss Payment Date (as defined below), as replacement for the Airframe or Airframe and Engines with respect to which an Event of Loss has occurred, a Replacement Airframe (together with a number of Replacement Engines equal to the number of Engines, if any, with respect to which the Event of Loss occurred), such Replacement Airframe and Replacement Engines to be owned by Company free and clear of all Liens (other than Permitted Liens); provided that if Company has not performed such obligation on or prior to the Loss Payment Date, then Company shall on the Loss Payment Date prepay the Equipment Notes in full in accordance with Section 2.10; or (ii) redeem, on or before the Loss Payment Date, the Equipment Notes in full in accordance with Section 2.10. Company shall give Loan Trustee 20 days prior written notice if it elects to redeem the Equipment Notes on any day prior to the Loss Payment Date. The "Loss Payment Date" with respect to an Event of Loss means the Business Day next succeeding the 120th day following the date of occurrence of such Event of Loss. -43- If Company elects to substitute a Replacement Airframe (or a Replacement Airframe and one or more Replacement Engines, as the case may be) Company shall, at its sole expense, not later than the Loss Payment Date, (A) cause an Indenture Supplement for such Replacement Airframe and Replacement Engines, if any, to be delivered to Loan Trustee for execution and, upon such execution, to be filed for recordation pursuant to the Transportation Code or the applicable laws of such other jurisdiction in which the Aircraft is then registered, (B) cause a financing statement or statements with respect to the Replacement Airframe and Replacement Engines, if any, or other requisite documents or instruments to be filed in such place or places as necessary in order to perfect Loan Trustee's interest therein in the United States, or in any other jurisdiction in which the Aircraft is then registered, (C) furnish Loan Trustee with an opinion of Company's counsel (which may be internal counsel of Company) addressed to Loan Trustee to the effect that upon such replacement, such Replacement Airframe and Replacement Engines, if any, will be subject to the Lien of this Indenture and addressing the matters set forth in clauses (A) and (B), (D) furnish Loan Trustee with a certificate of an independent aircraft engineer or appraiser, certifying to the reasonable satisfaction of Loan Trustee that the Replacement Airframe and Replacement Engines, if any, have a value and utility (without regard to hours or cycles) at least equal to the Airframe and Engines, if any, so replaced, assuming the Airframe and such Engines were in the condition and repair required by the terms hereof immediately prior to the occurrence of such Event of Loss and that such Replacement Airframe shall have been delivered from the Manufacturer no earlier than one year prior to the date that the Airframe being replaced was delivered from the Manufacturer, (E) furnish Loan Trustee with evidence of compliance with the insurance provisions of Section 7.06 with respect to such Replacement Airframe and Replacement Engines, if any, (F) furnish Loan Trustee with a copy of the original bill of sale respecting such Replacement Airframe and a copy of the original bill of sale or, if the bill 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 -44- selected by Company, which counsel shall be reasonably satisfactory to Loan Trustee) addressed to Loan Trustee as to the due registration of such Replacement Aircraft and the due recordation of such Indenture Supplement or such other requisite documents or instruments and the validity and perfection of the security interest in the Replacement Aircraft granted to Loan Trustee under this Indenture. For all purposes hereof, upon the attachment of the Lien of this Indenture thereto, the Replacement Aircraft and Replacement Engines, if any, shall become part of the Collateral, the Replacement Airframe shall be deemed an "Airframe" as defined herein, and each such Replacement Engine shall be deemed an "Engine" as defined herein. Upon compliance with clauses (A) through (F) of the third paragraph of this Section 7.05(a), Loan Trustee shall execute and deliver to Company an appropriate instrument releasing such replaced Airframe and Engines (if any) installed thereon at the time such Event of Loss occurred, all proceeds (including, without limitation, insurance proceeds), the Warranty Rights in respect of such replaced Airframe and Engines (if any) and all rights relating to the foregoing, from the Lien of this Indenture and assigning to Company all claims against third Persons for damage to or loss of the Airframe and Engines arising from the Event of Loss. If, after an Event of Loss, Company performs the option set forth in clause (ii) of the first paragraph of this Section 7.05(a), Loan Trustee shall execute and deliver to Company an appropriate instrument releasing the Aircraft, all proceeds (including, without limitation, insurance proceeds), the Warranty Rights in respect of the Aircraft and all rights relating to the foregoing from the Lien of this Indenture and assigning to Company all claims against third Persons for damage to or loss of the Aircraft arising from the Event of Loss. (b) Event of Loss with Respect to an Engine. Upon the occurrence of an Event of Loss with respect to an Engine under circumstances in which there has not occurred an Event of Loss with respect to the Airframe, Company shall give Loan Trustee prompt written notice thereof and shall, within 120 days after the occurrence of such Event of Loss, cause to be subjected to the Lien of this Indenture, as replacement for the Engine with respect to which such Event of Loss occurred, a Replacement Engine free and clear of all Liens (other than Permitted Liens). Prior to or at the time of any replacement under this Section 7.05(b), Company will (i) cause an Indenture Supplement covering such Replacement Engine to be delivered to Loan Trustee for execution and, upon such execution, to be filed for recordation pursuant to the Transportation Code or the applicable laws of any other jurisdiction in which the Aircraft is then registered, (ii) furnish Loan Trustee with a copy of the original bill of sale or, if the bill 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 -45- (who may be an employee of Company) certifying to the reasonable satisfaction of Loan Trustee that such Replacement Engine has a value and utility (without regard to hours or cycles) at least equal to the Engine so replaced assuming such Engine was in the condition and repair required by the terms hereof immediately prior to the occurrence of such Event of Loss and (v) furnish Loan Trustee with evidence of compliance with the insurance provisions of Section 7.06 with respect to such Replacement Engine. In the case of each Replacement Engine subjected to the Lien of this Indenture under this Section 7.05(b), promptly upon the recordation of the Indenture Supplement covering such Replacement Engine pursuant to the Transportation Code (or pursuant to the applicable law of such other jurisdiction in which the Aircraft is registered), Company will cause to be delivered to Loan Trustee an opinion of FAA counsel selected by Company reasonably satisfactory to Loan Trustee if at the time of the Event of Loss the Aircraft was registered under the laws of the United States (or, if at the time of the Event of Loss the Aircraft was registered under the laws of another jurisdiction, counsel qualified to opine on matters of registration in such jurisdiction selected by Company, which counsel shall be reasonably satisfactory to Loan Trustee) addressed to Loan Trustee as to the due recordation of such Indenture Supplement or such other requisite documents or instruments and the validity and perfection of the security interest in the Replacement Engine granted to Loan Trustee under this Indenture. For all purposes hereof, upon the attachment of the Lien of this Indenture thereto, the Replacement Engine shall become part of the Collateral and shall be deemed an "Engine" as defined herein. Upon compliance with clauses (i) through (v) of the first sentence of this paragraph, Loan Trustee shall execute and deliver to Company an appropriate instrument releasing such replaced Engine, any proceeds (including, without limitation, insurance proceeds), the Warranty Rights in respect of such replaced Engine and all rights relating to any of the foregoing from the Lien of this Indenture and assigning to Company all claims against third Persons for damage to or loss of such Engine arising from the Event of Loss. (c) Application of Payments for Event of Loss from Requisition of Title or Use. Any payments other than insurance proceeds (the application of which is provided for in Section 7.06) received at any time by Company or by Loan Trustee from any government or other Person with respect to an Event of Loss to the Airframe or any Engine, will be applied as follows: (i) if such payments are received with respect to the Airframe or the Airframe and any Engines installed on the Airframe that has been or is being replaced by Company pursuant to Section 7.05(a), such payments shall be paid over to, or retained by, Loan Trustee and upon completion of such replacement shall be paid over to, or retained by, Company; (ii) if such payments are received with respect to the Airframe or the Airframe and any Engines installed on the Airframe that has not been and will not be replaced pursuant to Section 7.05(a), so much of such payments remaining after reimbursement of Loan Trustee for costs and expenses that shall not exceed the amounts required to be paid to Noteholders pursuant to Section 2.10 shall be applied in reduction of Company's obligation to pay such amounts, if not already paid by Company, or, if already paid by Company, shall be applied to reimburse Company for its payment of such amount and the balance, if any, of such payment remaining thereafter will be paid over to, or retained by, Company; and -46- (iii) if such payments are received with respect to an Engine with regard to which an Event of Loss has occurred, so much of such payments remaining after reimbursement of Loan Trustee for costs and expenses shall be paid over to, or retained by, Company; provided that Company has fully performed its obligations under Section 7.05(b) with respect to the Event of Loss for which such payments are made. (d) Requisition for Use by the Government of the Airframe and the Engines Installed Thereon. In the event of the requisition for use by any government (it being acknowledged that the use of the Airframe or any Engine pursuant to the CRAF Program does not constitute such a requisition) of the Airframe and the Engines or engines installed on the Airframe that does not constitute an Event of Loss, all of Company's rights and obligations under this Indenture with respect to the Airframe and such Engines shall continue to the same extent as if such requisition had not occurred; provided that, notwithstanding the foregoing, Company's obligations other than payment obligations shall only continue to the extent feasible. All payments received by Company or Loan Trustee from such government for such use of the Airframe and Engines or engines shall be paid over to, or retained by, Company. (e) Requisition for Use by the Government of an Engine not Installed on the Airframe. If any government requisitions the use, for a period in excess of sixty (60) days, of any Engine not then installed on the Airframe, Company will replace such Engine by complying with the terms of Section 7.05(b) to the same extent as if an Event of Loss had occurred with respect to such Engine. Upon such replacement, any payments received by Company or Loan Trustee from such government with respect to such requisition shall be paid over to, or retained by, Company. (f) Application of Payments During Existence of Event of Default. Any amount referred to in Section 7.05 that is payable to or retainable by Company shall not be paid to or retained by Company if at the time of such payment or retention an Event of Default or Payment Default has occurred and is continuing, but shall be held by or paid over to Loan Trustee as security for the obligations of Company under this Indenture, the Participation Agreement, the Related Indentures and the Related Participation Agreements. When any such Event of Default or Payment Default ceases, such amount shall be paid to Company. Section 7.06 Insurance. (a) Aircraft Liability Insurance. (i) Except as provided in clause (ii) of this subsection (a), and subject to the rights of Company to establish and maintain self-insurance in the manner and to the extent specified in Section 7.06(c), Company will carry, or cause to be carried, at no expense to Loan Trustee, aircraft liability insurance (including, but not limited to, bodily injury, personal injury and property damage liability, exclusive of manufacturer's product liability insurance) and contractual liability insurance with respect to the Aircraft (A) in amounts that are not less than the aircraft liability insurance applicable to similar aircraft and engines in Company's fleet on which Company carries insurance; provided that such liability insurance shall not be less than the amount certified in the insurance report delivered to Loan Trustee on the Closing Date, (B) of the type covering the same risks as from time to time applicable to aircraft operated by Company (or, if a Lease is then in effect, by the Permitted Lessee) of the same type as the Aircraft, and (C) that is maintained in effect with insurers of recognized responsibility. Any policies of insurance carried in accordance with this Section 7.06(a) and any policies taken out in substitution or replacement for any of such -47- policies shall: (A) name Loan Trustee, Subordination Agent, each Pass Through Trustee, Policy Provider and each Liquidity Provider as their Interests (as defined below in this Section 7.06) may appear, as additional insured (the "Additional Insureds"), (B) subject to the condition of clause (C) below, provide that, in respect of the interest of the Additional Insureds in such policies, the insurance shall not be invalidated by any action or inaction of Company and shall insure the Additional Insureds' Interests as they appear, regardless of any breach or violation of any warranty, declaration or condition contained in such policies by Company, (C) provide that, if such insurance is canceled for any reason whatever, or if any change is made in the policy that materially reduces the amount of insurance or the coverage certified in the insurance report delivered on the Closing Date to Loan Trustee, Policy Provider and Liquidity Providers, or if such insurance is allowed to lapse for nonpayment of premium, such cancellation, change or lapse shall not be effective as to any Additional Insured for 30 days (seven days, or such other period as is then generally available in the industry, in the case of any war risk or allied perils coverage) after receipt by such Additional Insured of written notice from such insurers of such cancellation, change or lapse, (D) provide that the Additional Insureds shall have no obligation or liability for premiums, commissions, assessments or calls in connection with such insurance, (E) provide that the insurers shall waive any rights of (1) set-off, counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of the Additional Insureds to the extent of any moneys due to the Additional Insureds and (2) subrogation against the Additional Insureds to the extent that Company has waived its rights by its agreements to indemnify the Additional Insureds pursuant to the Operative Documents, (F) be primary without right of contribution from any other insurance carried by any Additional Insured with respect to its Interests as such in the Aircraft and (G) expressly provide that all of the provisions thereof, except the limits of liability, shall operate in the same manner as if there were a separate policy covering each insured. "Interests" as used in this Section 7.06(a) and in Section 7.06(b) with respect to any Person means the interests of such Person in the transactions contemplated by the Operative Documents. In the case of a lease or contract with any government in respect of the Aircraft or any Engine, or in the case of any requisition for use of the Aircraft or any Engine by any government, a valid agreement by such government to indemnify Company, or an insurance policy issued by such government, against any of the risks that Company is required to insure against hereunder shall be considered adequate insurance for purposes of this Section 7.06(a) to the extent of the risks (and in the amounts) that are the subject of such indemnification or insurance. (ii) During any period that the Airframe or an Engine, as the case may be, is on the ground and not being flown, Company may carry or cause to be carried as to such non-flown Airframe or Engine, in lieu of the insurance required by clause (i) above, and subject to self-insurance to the extent permitted by Subsection 7.06(c), insurance otherwise conforming with the provisions of said clause (i) except that: (A) the amounts of coverage shall not be required to exceed the amounts of airline liability insurance from time to time applicable to airframes or engines owned or leased by Company (or, if a Lease is then in effect, by the Permitted Lessee) of the same type as such non-flown Airframe or Engine and that are on the ground and not being flown and (B) the scope of the risks covered and the type of insurance shall be the same as from time to time are applicable to airframes or engines operated by Company (or, if a Lease is then in effect, by the Permitted Lessee) of the same type as such non-flown Airframe or Engine and that are on the ground and not being flown. -48- (b) Insurance Against Loss or Damage to Aircraft. (i) Except as provided in clause (ii) of this subsection (b), and subject to the rights of Company to establish and maintain self-insurance in the manner and to the extent specified in Section 7.06(c), Company shall maintain, or cause to be maintained, in effect with insurers of recognized responsibility, at no expense to Loan Trustee, all-risk aircraft hull insurance covering the Aircraft and all-risk coverage with respect to any Engines or Parts while removed from the Aircraft (including, without limitation, war risk insurance if and to the extent the same is maintained by Company (or, if a Lease is then in effect, by the Permitted Lessee) with respect to other similar aircraft operated by Company or such Permitted Lessee, as the case may be, on the same routes) that is of the type as from time to time applicable to the aircraft operated by Company (or, if a Lease is then in effect, by the Permitted Lessee) of the same type as the Aircraft; provided that (A) such insurance (including the permitted self-insurance) shall at all times while the Aircraft is subject to this Indenture be for an amount not less than 110% of the aggregate principal amount of the Equipment Notes outstanding from time to time, (B) such insurance need not cover an Engine while attached to an airframe not owned, leased or operated by Company, and (C) such insurance covering Engines and Parts removed from an Airframe or an airframe or (in the case of Parts) an Engine need be obtained only to the extent available at reasonable cost (as reasonably determined by Company). Any policies carried in accordance with this Section 7.06(b) and any policies taken out in substitution or replacement for any such policies shall: (A) provide that any insurance proceeds up to an amount equal to the outstanding principal amount of the Equipment Notes, together with accrued but unpaid interest thereon, plus an amount equal to the interest that would accrue on the outstanding principal amount of the Equipment Notes at the Debt Rate in effect on the date of payment of such insurance proceeds to Loan Trustee (as provided for in this sentence) during the period commencing on the day following the date of such payment to Loan Trustee and ending on the Loss Payment Date (the sum of such three amounts being the "Loan Amount"), payable for any loss or damage constituting an Event of Loss with respect to the Aircraft and any insurance proceeds in excess of the amount set forth on Exhibit C up to the amount of the Loan Amount for any loss or damage to the Aircraft (or Engines) not constituting an Event of Loss with respect to the Aircraft (or Engines), shall be paid to Loan Trustee as long as the Indenture has not been discharged, and that all other amounts shall be payable to Company, unless the insurer has received notice that an Event of Default exists, in which case all insurance proceeds for any loss or damage to the Aircraft (or Engines) shall be payable to Loan Trustee, (B) subject to the conditions of clause (C) below, provide that, in respect of the interests of the Additional Insureds in such policies, the insurance shall not be invalidated by any action or inaction of Company and shall insure the Additional Insureds' Interests as they appear, regardless of any breach or violation by Company of any warranty, declaration or condition contained in such policies, (C) provide that if such insurance is canceled for any reason, or if any change is made in the insurance that materially reduces the coverage (not including the amount) certified in the insurance report delivered on the Closing Date to Loan Trustee, Policy Provider and Liquidity Providers or if such insurance is allowed to lapse for nonpayment of premium, such cancellation, change or lapse shall not be effective as to the Additional Insureds for 30 days (seven days, or such other period as is customarily available in the industry, in the case of war risk or allied perils coverage) after receipt by the Additional Insureds of written notice from such insurers of such cancellation, change or lapse, (D) provide that the Additional Insureds shall have no obligation or liability for premiums, commissions, assessments or calls in connection with such insurance, (E) provide that the insurers shall waive rights of (1) setoff, counterclaim or any -49- other deduction, whether by attachment or otherwise, in respect of any liability of the Additional Insureds to the extent of any moneys due to the Additional Insureds and (2) subrogation against the Additional Insureds to the extent Company has waived its rights by its agreement to indemnify the Additional Insureds pursuant to the Operative Documents and (F) be primary without right of contribution from any other insurance carried by any Additional Insured with respect to its Interests as such in the Aircraft. In the case of a lease or contract with any government in respect of the Aircraft or any Engine, or in the case of any requisition for use of the Aircraft or any Engine by any government, a valid agreement by such government to indemnify Company, or an insurance policy issued by such government, against any risks which Company is required hereunder to insure against shall be considered adequate insurance for purposes of this Section 7.06(b) to the extent of the risks (and in the amounts) that are the subject of such indemnification or insurance. (ii) During any period that the Airframe or an Engine is on the ground and not being flown, Company may carry or cause to be carried as to such non-flown Airframe or Engine, in lieu of the insurance required by clause (i) above, and subject to self-insurance to the extent permitted by Subsection 7.06(c), insurance otherwise conforming with the provisions of said clause (i) except that the scope of the risks covered and the type of insurance shall be the same as from time to time applicable to airframes and engines operated by Company (or, if a Lease is then in effect, by the Permitted Lessee) of the same type as such non-flown Airframe or Engine and that are on the ground and not being flown; provided that, subject to self-insurance to the extent permitted by Subsection 7.06(c), Company shall maintain or cause to be maintained insurance against risk of loss or damage to such non-flown Airframe or Engine in an amount at least equal to 110% of the aggregate outstanding principal amount of the Equipment Notes during such period that such Airframe or Engine is on the ground and not being flown. (c) Self-Insurance. Company may from time-to-time self-insure, by way of deductible, self-insured retention, premium adjustment or franchise or otherwise (including, with respect to insurance maintained pursuant to Subsections 7.06(a) or 7.06(b), insuring for a maximum amount that is less than the amounts set forth in Sections 7.06(a) and 7.06(b)), the risks required to be insured against pursuant to Sections 7.06(a) and 7.06(b), but in no case shall the self-insurance with respect to all of the aircraft and engines in Company's fleet (including, without limitation, the Aircraft) exceed for any 12-month policy year 1% of the average aggregate insurable value (for the preceding policy year) of all aircraft (including, without limitation, the Aircraft) on which Company carries insurance, unless an insurance broker of national standing certifies that the standard among other major United States airlines is a higher level of self-insurance, in which case Company may self-insure the Aircraft to such higher level. In addition to the foregoing right to self-insure, Company may self-insure to the extent of (1) any deductible per occurrence that, in the case of the Aircraft, is not in excess of the amount customarily allowed as a deductible in the industry or is required to facilitate claims handling or (2) any applicable mandatory minimum per aircraft (or if applicable per annum or other period) hull or liability insurance deductibles imposed by the aircraft hull or liability insurers. (d) Application of Insurance Payments. All losses will be adjusted by Company with the insurers. As between Loan Trustee and Company it is agreed that all insurance payments received under policies required to be maintained by Company hereunder, exclusive of any payments received in excess of the Loan Amount for the Aircraft from such -50- policies, as the result of the occurrence of an Event of Loss with respect to the Airframe or an Engine will be applied as follows: (i) if such payments are received with respect to the Airframe or the Airframe and any Engines installed on the Airframe that has been or is being replaced by Company pursuant to Section 7.05(a), such payments shall be paid over to, or retained by, Loan Trustee and upon completion of such replacement shall be paid over to, or retained by, Company; (ii) if such payments are received with respect to the Airframe or the Airframe and any Engines installed on the Airframe that has not been and will not be replaced as contemplated by Section 7.05(a), so much of such payments remaining after reimbursement of Loan Trustee for its costs and expenses as do not exceed the amounts required to be paid by Company pursuant to Section 2.10 shall be applied in reduction of Company's obligation to pay such amounts, if not already paid by Company, or, if already paid by Company, shall be applied to reimburse Company for its payment of such amounts and the balance, if any, of such payment remaining thereafter will be paid over to, or retained by, Company; and (iii) if such payments are received with respect to an Engine, so much of such payments remaining after reimbursement of Loan Trustee for its costs and expenses shall be paid over to, or retained by, Company; provided that Company has fully performed its obligations under Section 7.05(b) with respect to the Event of Loss for which such payments are made. In all events, the insurance payment of any property damage loss received under policies maintained by Company in excess of the Loan Amount for the Aircraft shall be paid to Company. The insurance payments for any loss or damage to the Airframe or an Engine not constituting an Event of Loss with respect to the Airframe or such Engine will be applied in payment (or to reimburse Company) for repairs or for replacement property in accordance with the terms of Sections 7.02 and 7.04, and any balance remaining after compliance with such Sections with respect to such loss or damage shall be paid to Company. Any amount referred to in the preceding sentence or in clause (i), (ii) or (iii) of the first paragraph of this Section 7.06(d) that is payable to Company shall not be paid to Company (or, if it has been previously paid directly to Company, shall not be retained by Company) if at the time of such payment an Event of Default or Payment Default has occurred and is continuing, but shall be paid to and held by Loan Trustee as security for the obligations of Company under this Indenture, and when any such Event of Default or Payment Default ceases, such amount shall, to the extent not theretofore applied as provided herein, be paid to Company. (e) Reports, Etc. On or before the Closing Date and annually following renewal of Company's insurance coverage, Company will furnish to Loan Trustee, Policy Provider and Liquidity Providers a report signed by a firm of independent aircraft insurance brokers appointed by Company (which brokers may be in the regular employ of Company), stating the opinion of such firm that the insurance then carried and maintained on the Aircraft -51- complies with the terms hereof and all premiums then due in connection with the insurance have been paid. All information contained in such report shall be Confidential Information and shall be treated by Loan Trustee, Policy Provider and Liquidity Providers and each of their affiliates and officers, directors, agents and employees in accordance with the provisions of Section 10.16. Company will cause such firm to notify Loan Trustee, Policy Provider and Liquidity Providers of any act or omission on the part of Company of which such firm has knowledge that might invalidate or render unenforceable, in whole or in part, any insurance on the Aircraft. Company will also cause such firm to notify Loan Trustee, Policy Provider and Liquidity Provider as promptly as practicable after such firm acquires knowledge that an interruption of any insurance carried and maintained on the Aircraft pursuant to this Section 7.06 will occur. Such information may only be provided to other Persons in accordance with Section 10.16. (f) Salvage Rights; Other. All salvage rights to the Airframe and each Engine shall remain with Company's insurers at all times, and any insurance policies of Loan Trustee insuring the Airframe or any Engine shall provide for a release to Company of any and all salvage rights in and to the Airframe or any Engine. Neither Loan Trustee nor any Noteholder may, directly or indirectly, obtain insurance for its own account with respect to the Airframe or any Engine if such insurance would limit or otherwise adversely affect the coverage or amounts payable under, or increase the premiums for, any insurance required to be maintained pursuant to this Section 7.06 or any other insurance maintained with respect to the Aircraft or any other aircraft in Company's fleet. (g) Right to Pay Premium. Notwithstanding the foregoing, Company agrees that in the event of cancellation of any insurance due to the nonpayment of premiums, Loan Trustee shall have the option, in its sole discretion, to pay any such premium that is due in respect of the coverage pursuant to this Indenture and to maintain such coverage until the scheduled expiry date of such insurance and, in such event, Company shall, upon demand, reimburse Loan Trustee for amounts so paid by it. ARTICLE VIII SUCCESSOR AND ADDITIONAL TRUSTEES Section 8.01 Resignation or Removal; Appointment of Successor. (a) The resignation or removal of Loan Trustee and the appointment of a successor Loan Trustee shall become effective only upon the successor Loan Trustee's acceptance of appointment as provided in this Section 8.01. Loan Trustee or any successor thereto must resign if at any time it ceases to be eligible in accordance with the provisions of Section 8.01(c) and may resign at any time without cause by giving at least 60 days' prior written notice to Company and each Noteholder. In addition, either Company (so long as no Event of Default or Payment Default shall have occurred and be continuing) or a Majority in Interest of Noteholders (but only with the consent of Company so long as no Event of Default or Payment Default shall have occurred and be continuing), may at any time remove Loan Trustee without cause by an instrument in writing delivered to Loan Trustee and each Noteholder, and, in case of a removal by a Majority in Interest of Noteholders, to Company. In the case of the resignation or removal of Loan Trustee, Company shall promptly appoint a successor Loan Trustee. If a successor Loan Trustee has not been appointed within 60 days after such notice of resignation or removal, Loan Trustee, -52- Company or any Noteholder may apply to any court of competent jurisdiction to appoint a successor Loan Trustee to act until such time, if any, as a successor is appointed as above provided. The successor Loan Trustee so appointed by such court shall immediately and without further act be superseded by any successor Loan Trustee appointed as above provided. (b) Any successor Loan Trustee, however appointed, shall execute and deliver to the predecessor Loan Trustee and Company an instrument accepting such appointment and assuming the obligations of Loan Trustee arising from and after the time of such appointment, and thereupon such successor Loan Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Loan Trustee in the trust hereunder applicable to it with like effect as if originally named Loan Trustee herein; but nevertheless upon the written request of such successor Loan Trustee, such predecessor Loan Trustee shall execute and deliver an instrument transferring to such successor Loan Trustee all the estates, properties, rights and powers of such predecessor Loan Trustee, and such predecessor Loan Trustee shall duly assign, transfer, deliver and pay over to such successor Loan Trustee all monies or other property and all other books and records, or true, correct and complete copies thereof, then held by such predecessor Loan Trustee. (c) This Indenture shall at all times have a Loan Trustee, however appointed, that is a Citizen of the United States (without the use of a voting trust) and a bank or trust company having a combined capital and surplus of at least $100,000,000 (or a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally guaranteed by a corporation organized and doing business under the laws of the United States or any state or territory thereof or the District of Columbia and having a combined capital and surplus of at least $100,000,000) or a corporation with a net worth of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of Loan Trustee upon reasonable or customary terms. If such bank, trust company or corporation publishes reports of conditions at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section 8.01(c) the combined capital and surplus of such bank, trust company or corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published. In case at any time Loan Trustee ceases to be eligible in accordance with the provisions of this Section 8.01(c), Loan Trustee shall resign immediately in the manner and with the effect specified in Section 8.01(a). (d) Any corporation into which Loan Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which Loan Trustee is a party, or any corporation to which substantially all the corporate trust business of Loan Trustee may be transferred, shall, subject to the terms of Section 8.01(c), be a successor Loan Trustee under this Indenture without further act. Section 8.02 Appointment of Additional and Separate Trustees. (a) Whenever (i) Loan Trustee deems it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Collateral is situated or to make any claim or bring any suit with respect to or in connection with the Collateral, any Operative Document or any of the transactions contemplated by the Operative Documents, (ii) Loan Trustee shall be advised by -53- counsel satisfactory to it that it is necessary or prudent in the interests of Noteholders (and Loan Trustee shall so advise Company) or (iii) Loan Trustee has been requested to do so by a Majority in Interest of Noteholders, then in any such case, Loan Trustee and, upon the written request of Loan Trustee, Company, shall execute and deliver an indenture supplemental hereto and such other instruments as from time to time are necessary or advisable either (1) to constitute one or more banks or trust companies or corporations meeting the requirements of Section 8.01(c) and approved by Loan Trustee, either to act jointly with Loan Trustee as additional trustee or trustees of all or any part of the Collateral or to act as separate trustee or trustees of all or any part of the Collateral, in each case with such rights, powers, duties and obligations consistent with this Indenture as is provided in such supplemental indenture or other instruments as Loan Trustee or a Majority in Interest of Noteholders deems necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional or separate trustee, subject in each case to the remaining provisions of this Section 8.02. If no Event of Default has occurred and is continuing, no additional or supplemental trustee shall be appointed without Company's consent. If an Event of Default shall have occurred and be continuing, Loan Trustee may act under the foregoing provisions of this Section 8.02(a) without the concurrence of Company, and Company hereby irrevocably appoints (which appointment is coupled with an interest) Loan Trustee as its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.02(a). Loan Trustee may, in such capacity, execute, deliver and perform any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee, subject in each case to the remaining provisions of this Section 8.02. In case any additional or separate trustee appointed under this Section 8.02(a) becomes incapable of acting, resigns or is removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to Loan Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.02(a). (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon Loan Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Collateral or otherwise payable under any Operative Documents to Loan Trustee shall be promptly paid over by it to Loan Trustee. All other rights, powers, duties and obligations conferred or imposed upon any additional or separate trustee shall be exercised or performed by Loan Trustee and such additional or separate trustee jointly except to the extent that applicable law of any jurisdiction in which any particular act is to be performed renders Loan Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Collateral in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of Loan Trustee or a Majority in Interest of Noteholders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that Loan Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Loan Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.02 shall be subject to, and shall have the benefit of Articles IV, V, VI, VIII, IX and X hereof insofar as they apply to Loan Trustee. The powers of any -54- additional or separate trustee appointed pursuant to this Section 8.02 shall not in any case exceed those of Loan Trustee. (c) If at any time Loan Trustee deems it no longer necessary or desirable or in the event that Loan Trustee has been requested to do so in writing by a Majority in Interest of Noteholders, Loan Trustee and, upon the written request of Loan Trustee, Company, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. Loan Trustee may act on behalf of Company under this Section 8.02(c) when and to the extent it could so act under Section 8.02(a) hereof. In any case, Company may remove an additional or separate trustee in the manner set forth in Section 8.01. ARTICLE IX AMENDMENTS AND WAIVERS Section 9.01 Amendments to this Indenture without Consent of Holders. At any time after the date hereof, Company and Loan Trustee may enter into one or more agreements supplemental hereto without notice to or consent of any Noteholder for any of the following purposes: (i) to evidence the succession of another Person to Company and the assumption by any such successor of the covenants of Company contained in any Operative Documents pursuant to Section 6.02(e) of the Participation Agreement; (ii) to cure any defect or inconsistency herein or in the Equipment Notes (provided, that such change does not adversely affect the interests of any Noteholder in its capacity solely as Noteholder); (iii) to cure any ambiguity or correct any mistake; (iv) to evidence the succession of a new trustee hereunder pursuant hereto or the removal of the trustee hereunder or to provide for or facilitate the appointment of an additional or separate trustee pursuant to Section 8.02 hereof; (v) to convey, transfer, assign, mortgage or pledge any property to or with Loan Trustee; (vi) to make any other provisions or amendments with respect to matters or questions arising hereunder or under the Equipment Notes, or to amend, modify or supplement any provision hereof or thereof, so long as such action shall not adversely affect the interests of Noteholders, Policy Provider or either Liquidity Provider; (vii) to correct or amplify the description of any property at any time subject to the Lien of this Indenture, or better to assure, convey and confirm unto Loan Trustee any property subject or required to be subject to the Lien of this Indenture or to subject to the Lien of this Indenture the Airframe or Engines or any Replacement Airframe or Replacement Engine; (viii) to add to the covenants of Company for the benefit of Noteholders, or to surrender any rights or power herein conferred upon Company; (ix) to add to the rights of Noteholders; (x) to include on the Equipment Notes any legend required by law or as otherwise necessary or advisable and (xi) to comply with any applicable requirements of the Trust Indenture Act of 1939, as amended, or any other requirements of applicable law or of any regulatory body. Section 9.02 Amendments to this Indenture with Consent of Holders. (a) With the written consent of a Majority in Interest of Noteholders, Company may, and Loan Trustee shall, subject to Section 9.06, at any time and from time to time, enter into such supplemental agreements to add any provisions to or to change or eliminate any provisions of this Indenture or of any such supplemental agreements or to modify in any manner the rights and obligations of Company, Loan Trustee and of Noteholders under this Indenture; provided, however, that -55- without the consent of each Noteholder affected thereby and Policy Provider, an amendment under this Section 9.02 may not: (1) reduce the principal amount of, Break Amount, if any, Make-Whole Amount, if any, or interest on, any Equipment Note; (2) change the date on which any principal amount of, Break Amount, if any, Make-Whole Amount, if any, or interest on any Equipment Note, is due or payable; (3) create any Lien with respect to the Collateral prior to or pari passu with the Lien thereon under this Indenture except such as are permitted by this Indenture, or deprive any Noteholder of the benefit of the Lien on the Collateral created by this Indenture; (4) reduce the percentage of the outstanding principal amount of the Equipment Notes the consent of whose holders is required for any such supplemental agreement, or the consent of whose holders is required for any waiver of compliance with certain provisions of this Indenture or of certain defaults hereunder or their consequences provided for in this Indenture; or (5) make any change in Section 4.05 or this Section 9.02, except to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of each Noteholder affected thereby. Notwithstanding the foregoing, (i) neither Company nor Loan Trustee shall enter into any amendment, waiver or modification of, or supplement or consent to, this Indenture or any other Operative Document other than the Participation Agreement (which is addressed in Section 9.03) which shall reduce, modify or amend any indemnities in favor of Policy Provider, Primary Liquidity Provider or Above Cap Liquidity Provider without the consent of Policy Provider, Primary Liquidity Provider or Above Cap Liquidity Provider that is subject to such reduction, modification or amendment and (ii) without the consent of each holder of an affected Related Equipment Note then outstanding, no amendment, waiver or modification of the terms hereof shall modify Section 3.03, except as provided herein. (b) It is not necessary under this Section 9.02 for Noteholders to consent to the particular form of any proposed supplemental agreement, but it is sufficient if they consent to the substance thereof. (c) Promptly after the execution by Company and Loan Trustee of any supplemental agreement pursuant to the provisions of this Section 9.02, Loan Trustee shall transmit by first-class mail a notice, setting forth in general terms the substance of such supplemental agreement, to all Noteholders, as the names and addresses of such Noteholders appear on the Equipment Note Register. Any failure of Loan Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental agreement. Section 9.03 Amendments, Waivers, Etc. of the Participation Agreement. Without the consent of a Majority in Interest of Noteholders, the respective parties to the -56- Participation Agreement may not modify, amend or supplement such agreement, or give any consent, waiver, authorization or approval thereunder, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions thereof or of modifying in any manner the rights of the respective parties thereunder; provided, however, that, without the consent of Loan Trustee or any Noteholder, the Participation Agreement may be modified, amended or supplemented in order (i) to cure any defect or inconsistency therein or to cure any ambiguity or correct any mistake, (ii) to amend, modify or supplement any provision thereof or make any other provision with respect to matters or questions arising thereunder or under this Indenture, provided that the making of any such other provision shall not materially adversely affect the interests of Noteholders or (iii) to make any other change, or reflect any other matter, of the kind referred to in clauses (i) through (xi) of Section 9.01. Notwithstanding the foregoing, without the consent of either Liquidity Provider or Policy Provider, Company shall not enter into any amendment, waiver or modification of or supplement or consent to the Participation Agreement which shall reduce, modify or amend any indemnities in favor of such Liquidity Provider or Policy Provider contained therein. Section 9.04 Revocation and Effect of Consents. Until an amendment or waiver becomes effective, a consent to it by a Noteholder is a continuing consent by Noteholder and every subsequent Noteholder, even if notation of the consent is not made on any Equipment Note. Section 9.05 Notation on or Exchange of Equipment Notes. Loan Trustee may place an appropriate notation about an amendment or waiver on any Equipment Note thereafter executed. Loan Trustee in exchange for such Equipment Notes may execute new Equipment Notes that reflect the amendment or waiver. Section 9.06 Trustee Protected. If, in the reasonable opinion of the institution acting as Loan Trustee, any document required to be executed by it pursuant to the terms of Section 9.01 or 9.02 adversely affects any right, duty, immunity or indemnity with respect to such institution under this Indenture, such institution may in its discretion decline to execute such document. ARTICLE X MISCELLANEOUS Section 10.01 Termination of Indenture. (a) Upon (or at any time after) payment in full of the principal amount, Make-Whole Amount, if any, Break Amount, if any, and interest on and all other amounts due under all Equipment Notes and Related Equipment Notes, and provided that there shall then be no other Secured Obligations or Related Secured Obligations due to Noteholders, Related Noteholders, Indenture Indemnitees, Loan Trustee and Related Loan Trustees hereunder or under the Participation Agreement, the other Operative Documents or the Related Indentures, Company and Loan Trustee shall be deemed to have been released and discharged from their respective obligations hereunder and under the Equipment Notes and the security interest, mortgage lien and all other estate, right, title and interest granted by this Indenture shall cease and become null and void and all of the property, rights, interests and privileges granted as security for the Equipment Notes shall revert to and revest in Company -57- without any other act or formality whatsoever, and Loan Trustee shall, upon the written request of Company, execute and deliver to, or as directed in writing by, Company an appropriate instrument (in due form for recording) releasing the Aircraft and the balance of the Collateral from the Lien of this Indenture together with such other instruments and documents as Company reasonably requests to give effect to the release and termination, and, in such event, this Indenture and the trusts created hereby shall terminate and this Indenture shall be of no further force or effect; provided, however, that this Indenture and the trusts created hereby shall earlier terminate and this Indenture shall be of no further force or effect upon any sale or other final disposition by Loan Trustee of all property constituting part of the Collateral and the final distribution by Loan Trustee of all monies or other property or proceeds constituting part of the Collateral in accordance with the terms hereof. Except as otherwise provided above, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof ; provided further, however, that no payment of any amount due under any Related Equipment Note or any Related Indenture, any amount payable to any Related Loan Trustee or payment of any other Related Secured Obligation shall be required in connection with the termination of this Indenture arising from a mandatory redemption of Equipment Notes pursuant to Section 2.10(a). Notwithstanding the foregoing, if this Indenture has not terminated prior to the Final Payment Date, this Indenture shall not terminate on the Final Payment Date unless no Event of Default of the type referred to in Section 4.01(j) exists. Section 10.02 No Legal Title to Collateral in Noteholders. No Noteholder shall have legal title to any part of the Collateral. No transfer, by operation of law or otherwise, of any Equipment Note or other right, title and interest of any Noteholder in and to the Collateral or hereunder shall operate to terminate this Indenture or entitle such Noteholder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Collateral. Section 10.03 Sale of Aircraft by Loan Trustee is Binding. Any sale or other conveyance of the Aircraft, the Airframe, any Engine or any interest therein by Loan Trustee made pursuant to the terms of this Indenture shall bind Noteholders and Company and shall be effective to transfer or convey all right, title and interest of Loan Trustee, Company and such Noteholders in and to such Aircraft, Airframe, Engine or interest therein. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by Noteholders. Section 10.04 Indenture for Benefit of Company, Loan Trustee and Noteholders. Except as provided in the following sentence, nothing in this Indenture, whether express or implied, shall be construed to give any Person other than Company, Loan Trustee, Noteholders or the other Indenture Indemnitees any legal or equitable right, remedy or claim under or in respect of this Indenture. Company agrees and acknowledges that Policy Provider, each Related Noteholder and each Related Loan Trustee shall each be a third party beneficiary of the covenants and agreements of Company set forth herein and may rely on the covenants and agreements of Company set forth herein to the same extent as if such covenants and agreements of Company were made to such Person directly. -58- Section 10.05 Notices. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents required or permitted under the terms and provisions of this Indenture shall be in English and in writing, and given by United States registered or certified mail, courier service or facsimile, and any such notice shall be effective when delivered (or, if delivered by facsimile, upon completion of transmission and confirmation by the sender (by a telephone call to a representative of the recipient or by machine confirmation) that such transmission was received) addressed as follows: (i) if to Company, addressed to: Delta Air Lines, Inc. 1030 Delta Boulevard Atlanta, Georgia 30320 Attention: Treasurer, Dept. 856 Telephone: (404) 714-1724 Facsimile: (404) 715-4862 with a copy to the General Counsel at the same address, but Dept. 971 Telephone: (404) 715-2387 Facsimile: (404) 715-1657 (ii) if to Loan Trustee, addressed to: U.S. Bank Trust National Association 225 Asylum Street Goodwin Square Hartford, Connecticut 06103 Attention: Corporate Trust Division Telephone: (860) 244-1844 Facsimile: (860) 244-1881 or if to any Noteholder, addressed to such Noteholder at its address set forth in the Equipment Note Register maintained pursuant to Section 2.07 hereof. Any party, by notice to the other parties hereto, may designate different addresses for subsequent notices or communications. Whenever the words "notice" or "notify" or similar words are used herein, they mean the provision of formal notice as set forth in this Section 10.05. Section 10.06 Severability. Any provision of this Indenture that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. -59- Section 10.07 No Oral Modification or Continuing Waivers. No terms or provisions of this Indenture or of the Equipment Notes may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by Company and Loan Trustee, in compliance with Article IX. Any waiver of the terms hereof or of any Equipment Note shall be effective only in the specific instance and for the specific purpose given. Section 10.08 Successors and Assigns. All covenants and agreements contained herein shall bind and inure to the benefit of, and be enforceable by, each of the parties hereto and the successors and permitted assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Noteholder shall bind the successors and permitted assigns of such Noteholder. Each Noteholder by its acceptance of an Equipment Note agrees to be bound by this Indenture and all provisions of the Participation Agreement applicable to a Noteholder. Section 10.09 Headings. The headings of the various Articles and Sections herein and in the Table of Contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. Section 10.10 Normal Commercial Relations. Anything contained in this Indenture to the contrary notwithstanding, Loan Trustee, any Noteholder or any other party to any of the Operative Documents or the Pass Through Documents or any of their affiliates may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Company, fully to the same extent as if this Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Company for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. Section 10.11 Voting by Noteholders. All votes of Noteholders shall be governed by a vote of a Majority in Interest of Noteholders, except as otherwise provided herein. Section 10.12 Section 1110. It is the intention of the parties hereto that the security interest created hereby, to the fullest extent available under applicable law, entitles Loan Trustee, on behalf of Noteholders, to all of the benefits of Section 1110 with respect to the Aircraft. Section 10.13 Company's Performance and Rights. Any obligation imposed on Company herein shall require only that Company perform or cause to be performed such obligation, even if stated as a direct obligation, and the performance of any such obligation by any permitted assignee, lessee or transferee under an assignment, lease or transfer agreement then in effect and in accordance with the provisions of the Operative Documents shall constitute performance by Company and, to the extent of such performance, discharge such obligation by Company. Except as otherwise expressly provided herein, any right granted to Company in this Indenture shall grant Company the right to permit such right to be exercised by any such assignee, lessee or transferee. The inclusion of specific references to obligations or rights of any such assignee, lessee or transferee in certain provisions of this Indenture shall not in any way prevent or diminish the application of the provisions of the two sentences immediately preceding -60- with respect to obligations or rights in respect of which specific reference to any such assignee, lessee or transferee has not been made in this Indenture. Section 10.14 Counterparts. This Indenture may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Indenture including a signature page or pages executed by each of the parties hereto shall be an original counterpart of this Indenture, but all of such counterparts together shall constitute one instrument. SECTION 10.15 GOVERNING LAW. THIS INDENTURE HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND THIS INDENTURE, ANY INDENTURE SUPPLEMENT AND THE EQUIPMENT NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 10.16 Confidential Information. The term "Confidential Information" means: (a) the existence and terms of any lease of the Airframe or Engines pursuant to Section 7.02(a) and the identity of the Permitted Lessee thereunder; (b) all information obtained in connection with any inspection conducted by Loan Trustee or its representative pursuant to Section 7.03(a); (c) each certification furnished to Loan Trustee pursuant to Sections 7.06(a) and 7.06(b); (d) all information contained in each report furnished to Loan Trustee pursuant to Section 7.06(e); and (e) all information regarding the Warranty Rights. All Confidential Information shall be held confidential by Loan Trustee and each Noteholder and each affiliate, agent, officer, director, or employee of any thereof and shall not be furnished or disclosed by any of them to anyone other than (i) Loan Trustee or any Noteholder and (ii) their respective bank examiners, auditors, accountants, agents and legal counsel, and except as may be required by an order of any court or administrative agency or by any statute, rule, regulation or order of any governmental authority. Section 10.17 Submission to Jurisdiction. Each of the parties hereto, and by acceptance of Equipment Notes, each Noteholder, to the extent it may do so under applicable law, for purposes hereof and of all other Operative Agreements hereby (a) irrevocably submits itself to the non-exclusive jurisdiction of the courts of the State of New York sitting in the City of New York and to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Indenture, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto or thereto, or their successors or permitted assigns and (b) waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Indenture or the Equipment Notes or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by such courts. -61- IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed by their respective officers thereof duly authorized, as of the date first above written. DELTA AIR LINES, INC. By: ------------------------------------------- Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Loan Trustee By: ------------------------------------------- Name: Title: EXHIBIT A to INDENTURE AND SECURITY AGREEMENT INDENTURE SUPPLEMENT NO. ___ INDENTURE SUPPLEMENT NO. __ , dated _____________, ____ ("Indenture Supplement"), between DELTA AIR LINES, INC. ("Company") and U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as Loan Trustee under the Indenture (each as hereinafter defined). W I T N E S S E T H: WHEREAS, the Indenture and Security Agreement (N3760C), dated as of January 30, 2003 (the "Indenture"; capitalized terms used herein without definition shall have the meanings specified therefor in Annex A to the Indenture), between Company and U.S. Bank Trust National Association, not in its individual capacity, except as expressly provided therein, but solely as Loan Trustee ("Loan Trustee"), provides for the execution and delivery of supplements thereto substantially in the form hereof which shall particularly describe the Aircraft, and shall specifically grant a security interest in the Aircraft to Loan Trustee; and [WHEREAS, the Indenture relates to the Airframe and Engines described in Annex A attached hereto and made a part hereof, and a counterpart of the Indenture is attached to and made a part of this Indenture Supplement;]* [WHEREAS, Company has, as provided in the Indenture, heretofore executed and delivered to Loan Trustee Indenture Supplement(s) for the purpose of specifically subjecting to the Lien of the Indenture certain airframes and/or engines therein described, which Indenture Supplement(s) is/are dated and has/have been duly recorded with the FAA as set forth below, to wit: Date Recordation Date FAA Document Number]** - ---- ---------------- -------------------- NOW, THEREFORE, to secure the prompt and complete payment (whether at stated maturity, by acceleration or otherwise) of principal of, Make-Whole Amount, if any, and interest on, the Equipment Notes and all other amounts payable by Company under the Operative Documents and the performance and observance by Company of all the agreements and covenants to be performed or observed by Company for the benefit of Noteholders and Indenture Indemnitees contained in the Operative Documents, and in consideration of the premises and of - ----------------------------- * Use for Indenture Supplement No. 1 only. ** Use for all Indenture Supplements other than Indenture Supplement No. 1. A-1 the covenants contained in the Operative Documents, and for other good and valuable consideration given by Loan Trustee, Noteholders and Indenture Indemnitees to Company at or before the Closing Date, the receipt of which is hereby acknowledged, Company does hereby grant, bargain, sell, convey, transfer, mortgage, assign, pledge and confirm unto Loan Trustee and its successors in trust and permitted assigns, for the security and benefit of Loan Trustee, Noteholders and Indenture Indemnitees, a first priority security interest in, and mortgage lien on, all estate, right, title and interest of Company in, to and under the Aircraft, including the Airframe and Engines described in Annex A attached hereto, whether or not any such Engine from time to time is installed on the Airframe or any other airframe or any other aircraft, and any and all Parts relating thereto, and, to the extent provided in the Indenture, all substitutions and replacements of, and additions, improvements, accessions and accumulations to, the Aircraft, including the Airframe, the Engines and any and all Parts (in each case other than any substitutions, replacements, additions, improvements, accessions and accumulations that constitute items excluded from the definition of Parts by clauses (b), (c), (d), (e) and (f) thereof) relating thereto; To have and to hold all and singular the aforesaid property unto Loan Trustee, and its successors and assigns, in trust for the ratable benefit and security of Noteholders and Indenture Indemnitees, except as otherwise provided in the Indenture, including Section 2.13 and Article III of the Indenture, without any preference, distinction or priority of any one Equipment Note over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Indenture Supplement shall be construed as supplemental to the Indenture and shall form a part thereof, and the Indenture is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. THIS INDENTURE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. IN WITNESS WHEREOF, the undersigned have caused this Indenture Supplement No. __ to be duly executed by their respective duly authorized officers, on the date first above written. DELTA AIR LINES, INC. By: ------------------------------------------ Name: Title: A-2 U.S. BANK TRUST NATIONAL ASSOCIATION, as Loan Trustee By: ------------------------------------------ Name: Title: A-3 Annex A to Indenture Supplement No. __ DESCRIPTION OF AIRFRAME AND ENGINES AIRFRAME Manufacturer Model FAA Registration No. Manufacturer's Serial No. - ------------ ----- -------------------- ------------------------- ENGINES Manufacturer Model Manufacturer's Serial No. - ------------ ----- -------------------------
Each Engine is of 750 or more "rated take-off horsepower" or the equivalent of such horsepower. Annex A-1 EXHIBIT B to INDENTURE AND SECURITY AGREEMENT LIST OF PERMITTED COUNTRIES Australia Germany Norway Austria Greece Peoples' Republic of China Bahamas Hungary Poland Barbados Iceland Portugal Belgium India Republic of China (Taiwan) Bermuda Islands Ireland Singapore Brazil Italy South Africa British Virgin Islands Jamaica South Korea Canada Japan Spain Cayman Islands Liechtenstein Sweden Chile Luxembourg Switzerland Czech Republic Mexico Thailand Denmark Monaco Trinidad and Tobago Ecuador Netherlands Antilles United Kingdom Finland Netherlands, the France New Zealand
B-1 EXHIBIT C to INDENTURE AND SECURITY AGREEMENT AIRCRAFT TYPE VALUE FOR SECTION 7.06(b) Boeing 737-832 - $8,000,000 C-1 SCHEDULE I to INDENTURE AND SECURITY AGREEMENT DESCRIPTION OF EQUIPMENT NOTES The information set forth below this text in this Schedule has been intentionally omitted from the FAA filing copy as the parties hereto deem it to contain confidential information.
Original Principal Amount Maturity Date ------------------------- ---------------- Series G Equipment Notes: $21,917,485.13 January 25, 2008 Series C Equipment Notes: $8,325,376.09 January 25, 2008 Series D Equipment Notes: $2,883,344.43 January 25, 2008
SCHEDULE I-1 CERTAIN DEFINED TERMS
DEFINED TERM DEFINITION ------------ ---------- Debt Rate for Series G Equipment Notes: With respect to (i) the first Interest Period 2.09% per annum and (ii) any subsequent Interest Period, LIBOR for such Interest Period as determined pursuant to the Reference Agency Agreement plus the Applicable Margin for Series G Equipment Notes. Debt Rate for Series C Equipment Notes: With respect to (i) the first Interest Period 3.34% per annum and (ii) any subsequent Interest Period, LIBOR for such Interest Period as determined pursuant to the Reference Agency Agreement plus the Applicable Margin for Series C Equipment Notes. Debt Rate for Series D Equipment Notes: With respect to (i) the first Interest Period 3.84% per annum and (ii) any subsequent Interest Period, LIBOR for such Interest Period as determined pursuant to the Reference Agency Agreement plus the Applicable Margin for Series D Equipment Notes. Applicable Margin: In the case of Series G Equipment Notes, 0.75% per annum, as such margin may be adjusted as necessary for the period and in the circumstances specified in Section 2(d) of the Registration Rights Agreement; in the case of Series C Equipment Notes, 2.00% per annum; and in the case of Series D Equipment Notes, 2.50% per annum. Make-Whole Amount: In the case of the prepayment of the unpaid principal amount of Series G Equipment Notes, an amount equal to the following percentage of the principal amount of Series G Equipment Notes prepaid:
SCHEDULE I-2 IF REDEEMED DURING THE YEAR PRIOR TO THE ANNIVERSARY OF THE ISSUANCE DATE MAKE-WHOLE INDICATED BELOW AMOUNT ------------------- ---------- 1st 1.50% 2nd 1.00% 3rd 0.50% SCHEDULE I-3 EQUIPMENT NOTES AMORTIZATION SERIES G EQUIPMENT NOTES Percentage of Original Principal Amount Payment Date to be Paid The portion of this Schedule appearing below this text is intentionally deleted from the FAA filing counterpart because the parties hereto deem it to contain confidential information. [INTENTIONALLY OMITTED] SCHEDULE I-1 EQUIPMENT NOTES AMORTIZATION SERIES D EQUIPMENT NOTES Percentage of Original Principal Amount Payment Date to be Paid The portion of this Schedule appearing below this text is intentionally deleted from the FAA filing counterpart because the parties hereto deem it to contain confidential information. [INTENTIONALLY OMITTED] SCHEDULE I-2 SCHEDULE II to INDENTURE AND SECURITY AGREEMENT PASS THROUGH TRUST AGREEMENT AND PASS THROUGH TRUST SUPPLEMENTS Pass Through Trust Agreement, dated as of November 16, 2000, between Delta Air Lines, Inc. and U.S. Bank Trust National Association (as successor to State Street Bank and Trust Company of Connecticut, National Association), as trustee, as supplemented by Trust Supplement No. 2003-1G, dated as of January 30, 2003, Trust Supplement No. 2003-1C, dated as of January 30, 2003 and Trust Supplement No. 2003-1D, dated as of January 30, 2003. SCHEDULE II-1 EX-4.11 11 g83137exv4w11.txt PARTICIPATION AGREEMENT (N195DN) EXHIBIT 4.11 ================================================================================ PARTICIPATION AGREEMENT (N195DN) Dated as of January 30, 2003 among DELTA AIR LINES, INC., U.S. BANK TRUST NATIONAL ASSOCIATION, as Pass Through Trustee under each of the Pass Through Trust Agreements U.S. BANK TRUST NATIONAL ASSOCIATION, as Subordination Agent U.S. BANK TRUST NATIONAL ASSOCIATION, as Loan Trustee and U.S. BANK TRUST NATIONAL ASSOCIATION, in its individual capacity as set forth herein --------------- One Boeing 767-332ER Aircraft U.S. Registration No. N195DN ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE 1 DEFINITIONS Section 1.01 Definitions.................................................................................. 2 Section 1.02 Other Definitional Provisions................................................................ 2 ARTICLE 2 THE LOANS Section 2.01 The Loans.................................................................................... 2 Section 2.02 Issuance of Equipment Notes.................................................................. 2 Section 2.03 The Closing.................................................................................. 3 ARTICLE 3 CONDITIONS PRECEDENT Section 3.01 Conditions Precedent to Obligations of Pass Through Trustees................................. 3 Section 3.02 Conditions Precedent to Obligations of Company............................................... 6 ARTICLE 4 REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF COMPANY Section 4.01 Representations and Warranties of Company.................................................... 7 Section 4.02 General Indemnity............................................................................ 9 ARTICLE 5 REPRESENTATIONS, WARRANTIES AND COVENANTS OF U.S. BANK Section 5.01 Representations, Warranties and Covenants of U.S. Bank....................................... 14 ARTICLE 6 OTHER COVENANTS AND AGREEMENTS Section 6.01 Other Agreements............................................................................. 16 Section 6.02 Certain Covenants of Company................................................................. 18
-i- ARTICLE 7 MISCELLANEOUS Section 7.01 Notices...................................................................................... 20 Section 7.02 Survival of Representations, Warranties, Indemnities, Covenants and Agreements............... 21 Section 7.03 Governing Law................................................................................ 21 Section 7.04 Severability................................................................................. 21 Section 7.05 No Oral Modifications or Continuing Waivers; Consents........................................ 21 Section 7.06 Effect of Headings and Table of Contents..................................................... 21 Section 7.07 Successors and Assigns....................................................................... 21 Section 7.08 Benefits of Agreement........................................................................ 22 Section 7.09 Counterparts................................................................................. 22 Section 7.10 Submission to Jurisdiction................................................................... 22
Schedule I - Equipment Notes, Purchasers and Original Principal Amounts Schedule II - Trust Supplements Exhibit A-1 - Form of Opinion of Counsel for Company Exhibit A-2 - Form of Opinion of Cadwalader, Wickersham & Taft, special counsel for Company Exhibit A-3 - Form of Section 1110 Opinion of Cadwalader, Wickersham & Taft, special counsel for Company Exhibit B - Form of Opinion of Special Counsel for Loan Trustee, Subordination Agent and U.S. Bank Exhibit C - Form of Opinion of Special FAA Counsel Exhibit D-1 - Form of Opinion of Special Counsel for Primary Liquidity Provider Exhibit D-2 - Form of Opinion of German In-House Counsel for Primary Liquidity Provider Exhibit D-3 - Form of Opinion of In-House Counsel for Above Cap Liquidity Provider Exhibit E - Form of Manufacturer's Consent Exhibit F-1 - Form of Opinion of Special Counsel for Pass Through Trustees Exhibit F-2 - Form of Opinion of Special Counsel for Pass Through Trustees Exhibit G - Form of Opinion of In-House Counsel for Policy Provider Annex A - Definitions
-ii- PARTICIPATION AGREEMENT (N195DN) This PARTICIPATION AGREEMENT (N195DN), dated as of January 30, 2003, is made by and among DELTA AIR LINES, INC., a Delaware corporation (together with its successors and permitted assigns, "Company"), U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association (in its individual capacity, together with its successors and permitted assigns, "U.S. Bank"), not in its individual capacity except as otherwise expressly provided in any of the Operative Documents or the Pass Through Documents, but solely as trustee (in such capacity together with any successor or other trustee in such capacity, "Pass Through Trustee") under each of the Pass Through Trust Agreements (such term and other capitalized terms used herein without definition being defined as provided in Section 1.01), U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, as subordination agent and trustee (in such capacity, together with any successor trustee in such capacity, "Subordination Agent") under the Intercreditor Agreement, and U.S. BANK TRUST NATIONAL ASSOCIATION, as loan trustee (in such capacity, together with any successor trustee in such capacity, "Loan Trustee") under the Indenture. W I T N E S S E T H: WHEREAS, Company is the owner of that certain Boeing Model 767-332ER aircraft more particularly described in the Indenture Supplement originally executed and delivered under the Indenture; WHEREAS, concurrently with the execution and delivery of this Agreement, Company and Loan Trustee are entering into the Indenture, pursuant to which, among other things, Company will issue three series of Equipment Notes, which Equipment Notes are to be secured by a security interest in all right, title and interest of Company in and to the Aircraft and certain other property described in the Indenture; WHEREAS, pursuant to the Basic Pass Through Trust Agreement and each of the Trust Supplements set forth in Schedule II, concurrently with the execution and delivery of this Agreement, separate Pass Through Trusts are being created to facilitate certain of the transactions contemplated hereby, including, without limitation, the issuance and sale of Pass Through Certificates; WHEREAS, pursuant to the Intercreditor Agreement, Subordination Agent will hold the Equipment Notes on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS Section 1.01 Definitions. For the purposes of this Agreement, unless the context otherwise requires, capitalized terms used but not defined herein have the respective meanings set forth or incorporated by reference in Annex A. Section 1.02 Other Definitional Provisions. (a) The definitions stated herein and in Annex A apply equally to both the singular and the plural forms of the terms defined. (b) All references in this Agreement to designated "Articles", "Sections", "Subsections", "Schedules", "Exhibits", "Annexes" and other subdivisions are to the designated Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision of this Agreement, unless otherwise specifically stated. (c) The words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision. (d) All references in this Agreement to a "government" are to such government and any instrumentality or agency thereof. (e) Unless the context otherwise requires, whenever the words "including", "include" or "includes" are used herein, they shall be deemed to be followed by the phrase "without limitation". ARTICLE 2 THE LOANS Section 2.01 The Loans. Subject to the terms and conditions of this Agreement and the Indenture, on the Closing Date Pass Through Trustee for each Pass Through Trust shall make a loan to Company by paying to Company the aggregate original principal amounts of the Equipment Notes being issued to such Pass Through Trust as set forth on Schedule I opposite the name of such Pass Through Trust. Pass Through Trustees, on behalf of the Pass Through Trusts, shall make such loans to Company no later than 11:00 a.m. (New York City time) on the Closing Date by transferring such amount in immediately available funds to Company at its account at Citibank, N.A., 111 Wall Street, New York, New York, Account No. 40002617, ABA Number 021000089, with the request that the bank advise Company by telephone at (404) 715-2046 upon transfer of the funds. Section 2.02 Issuance of Equipment Notes. Upon the occurrence of the above payments by Pass Through Trustee for each Pass Through Trust to Company, Company shall issue, pursuant to and in accordance with Article II of the Indenture, to Subordination Agent as agent and trustee for Pass Through Trustee for each Pass Through Trust, one or more Equipment Notes of the maturity and aggregate principal amount set forth in Schedule I opposite the name -2- of such Pass Through Trust. Each such Equipment Note shall be duly authenticated by Loan Trustee pursuant to the Indenture, registered in the name of Subordination Agent and dated the Closing Date and shall be delivered by Loan Trustee to Subordination Agent. Section 2.03 The Closing. The closing (the "Closing") of the transactions contemplated hereby shall take place at the offices of Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York at 9:30 a.m. (New York City time) on January 30, 2003, or at such other time or place as the parties shall agree. ARTICLE 3 CONDITIONS PRECEDENT Section 3.01 Conditions Precedent to Obligations of Pass Through Trustees. The obligation of each Pass Through Trustee to make the loan contemplated by Article II is subject to the fulfillment (or the waiver by such Pass Through Trustee) prior to or on the Closing Date of the following conditions precedent: (a) Company shall have tendered the Equipment Notes to Loan Trustee for authentication, and Loan Trustee shall have authenticated such Equipment Notes and shall have tendered the Equipment Notes to Subordination Agent on behalf of the applicable Pass Through Trustee in accordance with Section 2.02. (b) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it a violation of law or governmental regulations for Pass Through Trustees to make the loans contemplated by Section 2.01 or to acquire the Equipment Notes. (c) This Agreement and the following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Pass Through Trustees or Loan Trustee), shall be in full force and effect and executed counterparts (or copies thereof where indicated) thereof shall have been delivered to each Pass Through Trustee: (i) the Intercreditor Agreement; (ii) the Liquidity Facilities; (iii) the Pass Through Trust Agreements; (iv) the Indenture and the Indenture Supplement covering the Aircraft and dated the Closing Date; (v) the Manufacturer's Consent; (vi) a copy of the FAA Bill of Sale; and (vii) a copy of the Warranty Bill of Sale. -3- (d) A Uniform Commercial Code financing statement or statements covering the security interest created by the Indenture shall have been executed and delivered by Company, as debtor, and by Loan Trustee, as secured party, and such financing statement or statements shall have been duly filed in all places necessary or desirable within the State of Delaware. (e) Each Pass Through Trustee shall have received the following: (i) a certificate dated the Closing Date of the Secretary or an Assistant Secretary of Company, certifying as to (A) a copy of the resolutions of the Board of Directors of Company or the executive committee thereof duly authorizing the transactions contemplated hereby and the execution, delivery and performance by Company of this Agreement and the Indenture and each other document required to be executed and delivered by Company in accordance with the provisions hereof or thereof and (B) a copy of the certificate of incorporation and by-laws of Company, as in effect on the Closing Date; (ii) a certificate or other evidence from the Secretary of State of the State of Delaware, dated as of a date reasonably near the Closing Date, as to the due incorporation and good standing of Company in such state; (iii) an incumbency certificate of Company as to the person or persons authorized to execute and deliver this Agreement, the Indenture and each other document to be executed by Company in connection with the transactions contemplated hereby and thereby, and the specimen signatures of such person or persons; and (iv) one or more certificates of Loan Trustee and Subordination Agent certifying to the reasonable satisfaction of Pass Through Trustees as to the due authorization, execution, delivery and performance by Loan Trustee and Subordination Agent of each of the Operative Documents to which Loan Trustee or Subordination Agent is or will be a party and any other documents to be executed by or on behalf of Loan Trustee or Subordination Agent in connection with the transactions contemplated hereby or thereby. (f) On the Closing Date, the following statements shall be correct: (i) the representations and warranties of Company herein are correct in all material respects as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties are correct on and as of such earlier date) and (ii) no event has occurred and is continuing that constitutes an Event of Default or an Event of Loss or would constitute an Event of Default or Event of Loss but for the requirement that notice be given or time elapse or both. (g) Each Pass Through Trustee and Loan Trustee shall have received (i) an opinion addressed to it from the General Counsel or an Associate General Counsel of Company (or such other internal counsel to Company as shall be reasonably satisfactory to Pass Through Trustees) substantially in the form set forth in Exhibit A-1 and (ii) opinions addressed to it from Cadwalader, Wickersham & Taft substantially in the forms set forth in Exhibits A-2 and A-3. -4- (h) Each Pass Through Trustee and Loan Trustee shall have received an opinion addressed to it from Bingham McCutchen LLP, special counsel for U.S. Bank, Loan Trustee and Subordination Agent, substantially in the form set forth in Exhibit B. (i) Each Pass Through Trustee and Loan Trustee shall have received an opinion addressed to it from Daugherty, Fowler, Peregrin & Haught, A Professional Corporation, special FAA counsel in Oklahoma City, Oklahoma, substantially in the form set forth in Exhibit C. (j) Each Pass Through Trustee and Loan Trustee shall have received a certificate or certificates signed by the chief financial or accounting officer, any Senior Vice President, the Treasurer, any Vice President or any Assistant Treasurer (or any other Responsible Officer) of Company, dated the Closing Date, certifying as to the correctness of each of the matters stated in Section 3.01(f). (k) Each Pass Through Trustee shall have received a certificate from U.S. Bank in its individual capacity and as Loan Trustee and Subordination Agent, as applicable, dated the Closing Date, signed by an authorized officer of U.S. Bank in its individual capacity and as Loan Trustee and Subordination Agent, as applicable, certifying for each such entity that no Loan Trustee Liens or Other Party Liens attributable to it, as applicable, exist, and further certifying as to the correctness of each of the matters stated in Section 5.01. (l) Each Pass Through Trustee shall have received opinions addressed to it from Milbank, Tweed, Hadley & McCloy LLP, special counsel for Primary Liquidity Provider, substantially in the form set forth in Exhibit D-1, from German in-house counsel for Primary Liquidity Provider, substantially in the form set forth in Exhibit D-2, and from in-house counsel for Above Cap Liquidity Provider substantially in the form set forth in Exhibit D-3. (m) Loan Trustee shall have received an insurance report of an independent insurance broker and the related certificates of insurance, each in form and substance reasonably satisfactory to Loan Trustee, as to the compliance with the terms of Section 7.06 of the Indenture relating to insurance with respect to the Aircraft. (n) No action or proceeding shall have been instituted nor shall governmental action be threatened before any court or governmental agency, nor shall any order, judgment or decree have been issued or proposed to be issued by any court or governmental agency at the time of the Closing to set aside, restrain, enjoin or prevent the completion and consummation of this Agreement or the transactions contemplated hereby. (o) Company shall have entered into the Pass Through Purchase Agreement, the Pass Through Certificates shall have been issued and sold pursuant to the Pass Through Purchase Agreement and the Initial Purchasers shall have transferred to Pass Through Trustees in immediately available funds an amount at least equal to the aggregate purchase price of the Equipment Notes to be purchased from Company. (p) Loan Trustee shall have received an executed copy of the Manufacturer's Consent substantially in the form set forth in Exhibit E. -5- (q) Each Pass Through Trustee shall have received an opinion from in-house counsel to the Policy Provider, substantially in the form set forth in Exhibit G. (r) All appropriate action required to have been taken prior to the Closing Date by the FAA or any governmental or political agency, subdivision or instrumentality of the United States, in connection with the transactions contemplated by this Agreement has been taken, and all orders, permits, waivers, authorizations, exemptions and approvals of such entities required to be in effect on the Closing Date in connection with the transactions contemplated by this Agreement have been issued. Promptly upon the recording of the Indenture (with the Indenture Supplement attached) pursuant to the Transportation Code, Company will cause Daugherty, Fowler, Peregrin & Haught, A Professional Corporation, special FAA counsel in Oklahoma City, Oklahoma to deliver to Subordination Agent, to Pass Through Trustees, to Loan Trustee and to Company an opinion as to the due recording of such instrument and the lack of filing of any intervening documents with respect to the Aircraft. Section 3.02 Conditions Precedent to Obligations of Company. The obligation of Company to issue and sell the Equipment Notes is subject to the fulfillment (or waiver by Company) prior to or on the Closing Date of the following conditions precedent: (a) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it a violation of law or governmental regulations for Company to enter into any transaction contemplated by the Operative Documents or the Pass Through Trust Agreements. (b) The documents referred to in Section 3.01(c) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Company), shall be in full force and effect and executed counterparts (or copies thereof where indicated) thereof shall have been delivered to Company, and Company shall have received such documents and evidence with respect to U.S. Bank, Liquidity Providers, Policy Provider, Loan Trustee, Subordination Agent and each Pass Through Trustee as Company reasonably requests in order to establish the consummation of the transactions contemplated by this Agreement, the taking of all corporate and other proceedings in connection therewith and compliance with the conditions herein set forth. (c) The Indenture (with the Indenture Supplement covering the Aircraft attached) shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the FAA pursuant to the Transportation Code. (d) On the Closing Date, the representations and warranties herein of U.S. Bank, Loan Trustee, Subordination Agent and Pass Through Trustees shall be correct as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall have been correct on and as of such earlier date), and, insofar as such representations and warranties -6- concern U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee, such party shall have so certified to Company. (e) Company shall have received each opinion referred to in Subsections 3.01(h), 3.01(i), 3.01(l) and 3.01(q), each such opinion (other than 3.01(l)) addressed to Company or accompanied by a letter from the counsel rendering such opinion authorizing Company to rely on such opinion as if it were addressed to Company, and the certificates referred to in Subsections 3.01(e)(iv) and 3.01(k). (f) Company shall have received an opinion addressed to it from Bingham McCutchen LLP, special counsel for Pass Through Trustees, substantially in the form set forth in Exhibit F-1 and from Reed Smith LLP, special counsel for Pass Through Trustees, substantially in the form set forth in Exhibit F-2. (g) No action or proceeding shall have been instituted nor shall governmental action be threatened before any court or governmental agency, nor shall any order, judgment or decree have been issued or proposed to be issued by any court or governmental agency at the time of the Closing to set aside, restrain, enjoin or prevent the completion and consummation of this Agreement or the transactions contemplated hereby. (h) Company shall have received a certificate from U.S. Bank dated the Closing Date, signed by an authorized officer of U.S. Bank, certifying for each Pass Through Trustee that no Other Party Liens attributable to it exist and further certifying as to the correctness of each of the matters stated in Section 5.01. (i) Company shall have been paid by Pass Through Trustee for each Pass Through Trust the aggregate original principal amount of the Equipment Notes being issued to such Pass Through Trust as set forth on Schedule I opposite the name of such Pass Through Trust. ARTICLE 4 REPRESENTATIONS, WARRANTIES AND INDEMNITIES OF COMPANY Section 4.01 Representations and Warranties of Company. Company represents and warrants that: (a) Company is a corporation duly incorporated and validly existing in good standing under the laws of the State of Delaware, is a Certificated Air Carrier, is a Citizen of the United States, has the corporate power and authority to own its properties or hold them under lease and to enter into and perform its obligations under the Operative Documents to which it is a party and is duly qualified to do business as a foreign corporation in good standing in each other jurisdiction in which the failure to so qualify would have a material adverse effect on the consolidated financial condition of Company and its subsidiaries, considered as a whole, and its jurisdiction of organization (as such term is used in Article 9 of the Uniform Commercial Code as in effect in the State of Delaware) is Delaware. -7- (b) The execution, delivery and performance by Company of this Agreement and the other Operative Documents to which Company is a party have been duly authorized by all necessary corporate action on the part of Company, do not require any stockholder approval or approval or consent of any trustee or holder of any indebtedness or obligations of Company, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on Company or the certificate of incorporation or by-laws of Company or contravene or result in a breach of, or constitute a default under, or result in the creation of any Lien (other than as permitted under the Indenture) upon the property of Company under, any material indenture, mortgage, contract or other agreement to which Company is a party or by which it or any of its properties may be bound or affected. (c) Neither the execution and delivery by Company of this Agreement and the other Operative Documents to which it is a party, nor the consummation by Company of any of the transactions contemplated hereby or thereby, requires the authorization, consent or approval of, the giving of notice to, the filing or registration with or the taking of any other action in respect of, the Department of Transportation, the FAA or any other federal or state governmental authority or agency, except for (i) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over Company's operation of the Aircraft required to be obtained on or prior to the Closing Date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or on the Closing Date will be, in full force and effect, (ii) the filings referred to in Section 4.01(e) (iii) authorizations, consents, approvals, notices and filings required to be obtained, taken, given or made under securities or Blue Sky or similar laws of the various states and foreign jurisdictions and (iv) consents, approvals, notices, registrations and other actions required to be obtained, given, made or taken only after the date hereof. (d) This Agreement and each other Operative Document to which Company is a party have been duly executed and delivered by Company and constitute the legal, valid and binding obligations of Company enforceable against Company in accordance with their terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity and except, in the case of the Indenture, as limited by applicable laws that may affect the remedies provided in the Indenture. (e) Except for (i) the filing for recordation pursuant to the Transportation Code of the Indenture (with the Indenture Supplement covering the Aircraft attached) and (ii) with respect to the security interests created by such documents, the filing of financing statements (and continuation statements at periodic intervals) under the Uniform Commercial Code of Delaware, no further filing or recording of any document is necessary under the laws of the United States or any state thereof as of the Closing Date in order to establish and perfect the security interest in the Aircraft created under the Indenture in favor of Loan Trustee as against Company and any third parties in any applicable jurisdiction in the United States. (f) Company is not an investment company or a company controlled by an investment company within the meaning of the Investment Company Act of 1940, as amended. -8- (g) As of the Closing Date, (i) Company has good title to the Aircraft, free and clear of Liens other than Permitted Liens, (ii) the Aircraft has been duly certificated by the FAA as to type and airworthiness in accordance with the terms of the Indenture, (iii) the Indenture (with the Indenture Supplement covering the Aircraft attached) has been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the FAA pursuant to the Transportation Code and (iv) the Aircraft is duly registered with the FAA in the name of Company. (h) Company holds all licenses, permits and franchises from the appropriate government entities necessary to authorize Company lawfully to engage in air transportation and to carry on scheduled commercial passenger service as currently conducted, except where the failure to so hold any such license, permit or franchise would not have a material adverse effect on the financial condition or operations of Company. (i) Neither Company nor any person authorized to act on its behalf has directly or indirectly offered any beneficial interest or security relating to the ownership of the Aircraft, or any of the Equipment Notes or any other interest in or security under the Indenture, for sale to, or solicited any offer to acquire any such interest or security from, or has sold any such interest or security to, any person in violation of the Securities Act of 1933, as amended. (j) No Person acting on behalf of Company is or will be entitled to any broker's fee, commission or finder's fee in connection with the transactions contemplated hereby, other than the fees and expenses payable by Company in connection with the sale of the Pass Through Certificates on the Closing Date. Section 4.02 General Indemnity. (a) Claims Defined. For the purposes of this Section 4.02, "Claims" means any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs or expenses of whatsoever kind and nature (whether or not on the basis of negligence, strict or absolute liability or liability in tort) that may be imposed on, incurred by, suffered by or asserted against an Indemnitee, as defined below, and, except as otherwise expressly provided in this Section 4.02, includes all reasonable out-of-pocket costs, disbursements and expenses (including reasonable out-of-pocket legal fees and expenses) actually incurred by an Indemnitee in connection therewith or related thereto. (b) Indemnitee Defined. For the purposes of this Section 4.02, "Indemnitee" means (i) U.S. Bank and Loan Trustee, (ii) each separate or additional trustee appointed pursuant to Section 8.02 of the Indenture, (iii) so long as it holds any Equipment Notes as agent and trustee of any Pass Through Trustee, Subordination Agent, (iv) so long as it is the holder of any Equipment Notes, each Pass Through Trustee, (v) Policy Provider and its affiliates and each Liquidity Provider and (vi) each of their respective successors and permitted assigns in such capacities, agents, servants, officers, employees and directors (the respective agents, servants, officers, employees and directors of each of the foregoing Indemnitees, as applicable, together with such Indemnitee and any affiliate of such Indemnitee, being collectively the "Related Indemnitee Group" of such Indemnitee); provided that such Persons, to the extent they are not signatories to this Agreement, have expressly agreed in writing to be bound by the terms of this Section 4.02 prior to, or concurrently with, the making of a Claim. If any Indemnitee fails to comply with any duty or obligation under this Section 4.02 with respect to any Claim, such -9- Indemnitee shall not be entitled to any indemnity with respect to such Claim under this Section 4.02 to the extent such failure was prejudicial to Company. No holder of a Pass Through Certificate in its capacity as such holder shall be an Indemnitee. (c) Claims Indemnified. Subject to the exclusions stated in Subsection 4.02(d), Company agrees to indemnify, protect, defend and hold harmless on an After-Tax Basis each Indemnitee against Claims resulting from or arising out of (a) the Operative Documents or the enforcement of any of the terms of the Operative Documents, (b) the Aircraft, the Airframe, any Engine or any Part, including, without limitation, with respect thereto, (i) the sale, purchase, acceptance, non-acceptance or rejection of the Aircraft under the Purchase Agreement or the ownership, possession, use, non-use, substitution, airworthiness, control, maintenance, repair, operation, registration, re-registration, de-registration, delivery, nondelivery, assignment, abandonment, condition, sale, lease, sublease, storage, modification, alteration, return, transfer or other disposition of the Aircraft, the Airframe, any Engine or any Part (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement) by Company, any Permitted Lessee or any other Person, (ii) tort liability, whether or not arising out of the negligence of any Indemnitee (whether active, passive or imputed), (iii) death or property damage of passengers, shippers or others, (iv) environmental control, noise or pollution, and (c) the offer, sale or delivery of any Equipment Notes, Pass Through Certificates or any interest therein or represented thereby. Without limiting the foregoing and subject to, and without duplication of, the provisions of Section 6.01(a), Company agrees to pay the reasonable ongoing fees, and the reasonable out-of-pocket costs and expenses actually incurred (including, without limitation, reasonable attorney's fees and disbursements actually incurred and, to the extent payable as provided in the Indenture, reasonable compensation and expenses of Loan Trustee's agents actually incurred), of Loan Trustee in connection with the transactions contemplated hereby. (d) Claims Excluded. The following are excluded from Company's agreement to indemnify an Indemnitee under this Section 4.02: (i) any Claim to the extent such Claim is attributable to acts or events occurring after (x) the Lien of the Indenture has been discharged or (y) the transfer of possession of the Aircraft pursuant to Article IV of the Indenture except to the extent that such Claim is attributable to acts occurring in connection with the exercise of remedies pursuant to Section 4.02 of the Indenture following the occurrence and continuance of an Event of Default; (ii) any Claim to the extent such Claim is, or is attributable to, a Tax, except with respect to paying indemnity amounts on an After-Tax Basis; (iii) any Claim to the extent such Claim is attributable to the negligence or willful misconduct of such Indemnitee or such Indemnitee's Related Indemnitee Group; (iv) any Claim to the extent such Claim is attributable to the noncompliance by such Indemnitee or such Indemnitee's Related Indemnitee Group with any of the terms of, or any misrepresentation by an Indemnitee or its Related Indemnitee Group contained in, this Agreement, any other Operative Document or any Pass Through Document to -10- which such Indemnitee or any of such Related Indemnitee Group is a party or any agreement relating hereto or thereto; (v) any Claim to the extent such Claim constitutes a Permitted Lien attributable to such Indemnitee; (vi) any Claim to the extent such Claim is attributable to the offer, sale, assignment, transfer, participation or other disposition (whether voluntary or involuntary) by or on behalf of such Indemnitee or its Related Indemnitee Group (other than during the occurrence and continuance of an Event of Default provided that any such offer, sale, assignment, transfer, participation or other disposition during the occurrence and continuation of an Event of Default shall not be subject to indemnification unless it is made in accordance with the Indenture and applicable law) of any Equipment Note or interest therein or Pass Through Certificate, all or any part of such Indemnitee's interest in the Operative Documents or the Pass Through Documents or any interest in the Collateral or any similar security; (vii) any Claim to the extent such Claim is attributable to (A) a failure on the part of Loan Trustee to distribute in accordance with this Agreement or the Indenture any amounts received and distributable by it hereunder or thereunder, (B) a failure on the part of Subordination Agent to distribute in accordance with the Intercreditor Agreement any amounts received and distributable by it thereunder or (C) a failure on the part of any Pass Through Trustee to distribute in accordance with the Pass Through Trust Agreement to which it is a party any amounts received and distributable by it thereunder; (viii) any Claim to the extent such Claim is attributable to the authorization or giving or withholding of any future amendments, supplements, waivers or consents with respect to any Operative Document or any Pass Through Document, other than such as have been requested by Company or that occur as the result of an Event of Default, or such as are expressly required or contemplated by the provisions of the Operative Documents or the Pass Through Documents; (ix) any Claim to the extent such Claim is payable or borne by (a) Company pursuant to any indemnification, compensation or reimbursement provision of any other Operative Document or any Pass Through Document or (b) a Person other than Company pursuant to any provision of any Operative Document or any Pass Through Document; (x) any Claim to the extent such Claim is an ordinary and usual operating or overhead expense or not an out-of-pocket expense actually incurred; (xi) any Claim to the extent such Claim is incurred on account of or asserted as a result of any "prohibited transaction" within the meaning of Section 406 of ERISA or Section 4975 of the Code; (xii) any Claim to the extent such Claim is attributable to one or more of the other aircraft financed through the offering of Pass Through Certificates (in the event of doubt, any Claim shall be allocated between the Aircraft and such other aircraft in the same proportion that the then outstanding Equipment Notes bear to the then outstanding -11- equipment notes issued with respect to the other aircraft and held by Pass Through Trustees); (xiii) any Claim by an Indemnitee related to the status of such Indemnitee as a passenger or shipper on any of Company's aircraft or as a party to a marketing or promotional or other commercial agreement with Company unrelated to the transactions contemplated by the Operative Documents; and (xiv) any Claim to the extent such Claim is attributable to the offer or sale by an Indemnitee (or any member of such Indemnitee's Related Indemnitee Group) of any interest in the Aircraft, the Equipment Notes, the Pass Through Certificates, or any similar interest, in violation of the Securities Act of 1933, as amended, or other applicable federal, state or foreign securities laws (other than any thereof caused by acts or omissions of Company of any of its affiliates). (e) Insured Claims. In the case of any Claim indemnified by Company hereunder that is covered by a policy of insurance maintained by Company, each Indemnitee agrees to cooperate, at Company's expense, with the insurers in the exercise of their rights to investigate, defend and compromise such Claim. (f) Claims Procedure. An Indemnitee shall promptly notify Company of any Claim as to which indemnification is sought. The failure to provide such prompt notice shall not release Company from any of its obligations to indemnify hereunder except to the extent that Company is prejudiced by such failure or Company's indemnification obligations are increased as a result of such failure (in which event Company shall not be responsible for such additional indemnification obligations). Such Indemnitee shall promptly submit to Company all additional information in such Indemnitee's possession to substantiate such Claim as Company reasonably requests. Subject to the rights of Company's insurers, Company may, at its sole cost and expense, investigate any Claim, and may in its sole discretion defend or compromise any Claim. At Company's expense, any Indemnitee shall cooperate with all reasonable requests of Company in connection therewith. Such Indemnitee shall not enter into a settlement or other compromise with respect to any Claim without the prior written consent of Company, which consent shall not be unreasonably withheld or delayed, unless such Indemnitee waives its right to be indemnified with respect to such Claim. Where Company or its insurers undertake the defense of an Indemnitee with respect to a Claim, no additional legal fees or expenses of such Indemnitee in connection with the defense of such Claim shall be indemnified hereunder unless such fees or expenses were incurred at the written request of Company or such insurers. Subject to the requirements of any policy of insurance, an Indemnitee may participate at its own expense in any judicial proceeding controlled by Company pursuant to the preceding provisions; provided that such party's participation does not, in the opinion of outside counsel appointed by Company or its insurers to conduct such proceedings, interfere with such control. Such participation shall not constitute a waiver of the indemnification provided in this Section 4.02. Notwithstanding anything to the contrary contained herein, Company shall not under any circumstances be liable for the fees and expenses of more than one counsel for all Indemnitees with respect to any one Claim. Notwithstanding anything to the contrary contained herein, an Indemnitee shall not under any circumstances be required or deemed to be required to contest any Claim or to assume responsibility for or control of any judicial proceeding with respect thereto. Company will -12- provide the relevant Indemnitee with such information not within the control of such Indemnitee, as is in Company's control or is reasonably available to Company, which such Indemnitee may reasonably request and will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to fulfill its obligations under this Section. (g) Subrogation. To the extent that a Claim is in fact paid in full by Company or its insurer, Company or such insurer (as the case may be) shall, without any further action, be subrogated to the rights and remedies of the Indemnitee on whose behalf such Claim was paid with respect to the transaction or event giving rise to such Claim. Such Indemnitee shall give such further assurances or agreements and shall cooperate with Company or such insurer, as the case may be, to permit Company or such insurer to pursue such rights and remedies, if any, to the extent reasonably requested by Company. So long as no Event of Default has occurred and is continuing, if an Indemnitee receives any payment, in whole or in part, from any party other than Company or its insurers with respect to any Claim paid by Company or its insurers, it shall promptly pay over to Company the amount received (but not an amount in excess of the amount Company or any of its insurers has paid in respect of such Claim). Any amount referred to in the preceding sentence that is payable to Company shall not be paid to Company, or, if it has been previously paid directly to Company, shall not be retained by Company, if at the time of such payment an Event of Default has occurred and is continuing, but shall be paid to and held by Loan Trustee as security for the obligations of Company under the Operative Documents. If Company agrees, such amount payable shall be applied against Company's obligations thereunder when and as they become due and payable. At such time as such Event of Default is no longer continuing, such amount, to the extent not previously so applied against Company's obligations, shall be paid to Company. (h) No Guaranty. Nothing set forth in this Section 4.02 constitutes a guarantee by Company that the Aircraft at any time will have any particular value, useful life or residual value. (i) Payments; Interest. Any amount payable to any Indemnitee on account of a Claim shall be paid within 30 days after receipt by Company of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the Claims that are the subject of and basis for such indemnity and the computation of the amount payable. Any payments made pursuant to this Section 4.02 directly to an Indemnitee or to Company, as the case may be, shall be made in immediately available funds at such bank or to such account as is specified by the payee in written directions to the payor or, if no such directions are given, by check of the payor payable to the order of the payee and mailed to the payee by certified mail, return receipt requested, postage prepaid to its address referred to in Section 7.01. To the extent permitted by applicable law, interest at the Past Due Rate shall be paid, on demand, on any amount or indemnity not paid when due pursuant to this Section 4.02 until the same is paid. Such interest shall be paid in the same manner as the unpaid amount in respect of which such interest is due. (j) Tax deduction or credit. If, by reason of any Claim payment made to or for the account of an Indemnitee by Company pursuant to this Section 4.02, such Indemnitee subsequently realizes a tax deduction or credit not previously taken into account in computing such payment, such Indemnitee shall promptly pay to Company, but only if Company has made -13- all payments then due and owing to such Indemnitee under the Operative Documents, an amount equal to the sum of (1) the actual reduction in Taxes realized by such Indemnitee which such Indemnitee determines in its good faith judgment is attributable to such deduction or credit, and (2) the actual reduction in Taxes realized by such Indemnitee as such Indemnitee determines in its good faith judgement is a result of any payment made by such Indemnitee pursuant to this sentence; provided that the amount payable by such Indemnitee pursuant to this sentence shall not exceed the sum of the amounts previously paid by Company in order to indemnify such Claim on an After-Tax Basis. If such tax benefit is subsequently disallowed or lost, upon written notice from the Indemnitee, the Company shall repay all amounts paid to it pursuant to this Section 4.2(j) in respect of such disallowed or lost tax benefits. ARTICLE 5 REPRESENTATIONS, WARRANTIES AND COVENANTS OF U.S. BANK Section 5.01 Representations, Warranties and Covenants of U.S. Bank. U.S. Bank, generally, and each of Loan Trustee, Subordination Agent and Pass Through Trustee as it relates to it, represents, warrants and covenants that: (a) U.S. Bank is a national banking association duly organized and validly existing in good standing under the laws of the United States, is eligible to be Loan Trustee under Section 8.01(a) of the Indenture, will promptly comply with Section 8.01(a) of the Indenture and has full power, authority and legal right to enter into and perform its obligations under each of the Operative Documents and the Pass Through Documents to which U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee is a party and, in its capacity as Loan Trustee and Pass Through Trustee, respectively, to authenticate the Equipment Notes and the Pass Through Certificates, respectively. U.S. Bank is qualified to act as Loan Trustee under Section 8.01(c) of the Indenture. (b) The execution, delivery and performance by U.S. Bank, individually or in its capacity as Loan Trustee, Subordination Agent or Pass Through Trustee, as the case may be, of this Agreement, each of the other Operative Documents and each of the Pass Through Documents to which U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee is a party, and the authentication of the Equipment Notes and the Pass Through Certificates, respectively, to be delivered on the Closing Date, have been duly authorized by all necessary action on the part of U.S. Bank, Loan Trustee, Subordination Agent and each Pass Through Trustee, as the case may be, and do not violate any law or regulation of the United States or of the state of the United States in which U.S. Bank is located and which governs the banking and trust powers of U.S. Bank or any order, writ, judgment or decree of any court, arbitrator or governmental authority applicable to U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee or any of their assets, will not violate any provision of the articles of association or by-laws of U.S. Bank and will not violate any provision of, or constitute a default under, any mortgage, indenture, contract, agreement or undertaking to which any of U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee is a party or by which any of them or their respective properties may be bound or affected. -14- (c) Neither the execution and delivery by U.S. Bank, individually or in its capacity as Loan Trustee, Subordination Agent or Pass Through Trustee, as the case may be, of this Agreement, any other Operative Document or any Pass Through Document to which U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee is a party, nor the consummation by U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee of any of the transactions contemplated hereby or thereby, requires the authorization, consent or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, (i) any governmental authority or agency of the United States or the state of the United States where U.S. Bank is located and regulating the banking and trust powers of U.S. Bank and (ii) any trustee or other holder of any debt of U.S. Bank. (d) This Agreement, each other Operative Document and each Pass Through Document to which U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee is a party have been duly executed and delivered by U.S. Bank, individually and in its capacity as Loan Trustee, Subordination Agent or Pass Through Trustee, as the case may be, and constitute the legal, valid and binding obligations of U.S. Bank, Loan Trustee, Subordination Agent and such Pass Through Trustee, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity. (e) It unconditionally agrees with and for the benefit of the parties to this Agreement that it will not directly or indirectly create, incur, assume or suffer to exist any Loan Trustee Lien or Other Party Lien attributable to it, and it agrees that it will, at its own cost and expense, promptly take such action as may be necessary to discharge and satisfy in full any such Lien; and it shall indemnify, protect, defend and hold harmless each Indemnitee and Company against Claims in any way resulting from or arising out of a breach by it of its obligations under this Section 5.01(e). (f) The Equipment Notes to be issued to Subordination Agent pursuant hereto are being acquired by it to be held under the Intercreditor Agreement. (g) Each of U.S. Bank, Loan Trustee, Subordination Agent and each Pass Through Trustee agrees that it will not impose any lifting charge, cable charge, remittance charge or any other charge or fee on any transfer by Company of funds to, through or by U.S. Bank, Loan Trustee, Subordination Agent or such Pass Through Trustee pursuant to this Agreement, any other Operative Document or any Pass Through Document, except as may be otherwise agreed to in writing by Company. (h) Each of U.S. Bank, Loan Trustee, Subordination Agent and any Pass Through Trustee agrees to be bound by the terms of Section 10.16 of the Indenture. (i) There are no Taxes payable by U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee imposed by the State of Connecticut, the State of Delaware or any political subdivision or taxing authority of either thereof in connection with the execution, delivery or performance by U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee of any Operative Document or any Pass Through Document (other than franchise or -15- other taxes based on or measured by any fees or compensation received by any such Person for services rendered in connection with the transactions contemplated by the Operative Documents or the Pass Through Documents), and there are no Taxes payable by any Pass Through Trustee imposed by the State of Connecticut, the State of Delaware or any political subdivision of either thereof in connection with the acquisition, possession or ownership by such Pass Through Trustee of any of the Equipment Notes (other than franchise or other taxes based on or measured by any fees or compensation received by such Pass Through Trustee for services rendered in connection with the transactions contemplated by the Operative Documents or the Pass Through Documents) and, assuming that the Pass Through Trusts will not be taxable for Federal income tax purposes as corporations, but, rather, will be characterized for such purposes as grantor trusts or partnerships, the Pass Through Trusts will not be subject to any Taxes imposed by the State of Connecticut, the State of Delaware or any political subdivision of either thereof. (j) Except with the consent of Company, which shall not be unreasonably withheld, U.S. Bank will act as Pass Through Trustee solely through its offices within the State of Connecticut, except for such services that may be performed for it by various agents, but not directly by it, in other states. (k) There are no pending or, to its knowledge, threatened actions or proceedings against U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee to perform its obligations under any Operative Document or any Pass Through Document. (l) The representations and warranties contained in Section 7.15 of each Pass Through Trust Agreement are true, complete and correct as of the Closing Date. ARTICLE 6 OTHER COVENANTS AND AGREEMENTS Section 6.01 Other Agreements. (a) Company agrees promptly to pay (without duplication of any other obligation Company may have to pay such amounts) (A) the initial and annual fees and (to the extent Loan Trustee is entitled to be reimbursed for its reasonable expenses) the reasonable expenses of Loan Trustee in connection with the transactions contemplated hereby and (B) the following expenses incurred by Loan Trustee, Subordination Agent and Pass Through Trustees in connection with the negotiation, preparation, execution and delivery of this Agreement, the other Operative Documents and the other documents or instruments referred to herein or therein: (i) the reasonable fees, expenses and disbursements of (x) Bingham McCutchen LLP, special counsel for Loan Trustee, Subordination Agent and Pass Through Trustees and (y) Daugherty, Fowler, Peregrin & Haught, A Professional Corporation, special FAA counsel in Oklahoma City, Oklahoma, in each case to the extent actually incurred; and -16- (ii) all reasonable expenses incurred in connection with printing and document production or reproduction expenses, and in connection with the filing of Uniform Commercial Code financing statements. (b) Loan Trustee, Noteholders, Subordination Agent and each Pass Through Trustee agree to execute and deliver, at Company's expense, all such documents as Company reasonably requests for the purpose of continuing the registration of the Aircraft at the FAA in Company's name. In addition, each of Loan Trustee, Subordination Agent, each Pass Through Trustee and any other Noteholder agrees, for the benefit of Company, to cooperate with Company in effecting any foreign registration of the Aircraft pursuant to Section 7.02(e) of the Indenture; provided that prior to any such change in the country of registry of the Aircraft the conditions set forth in Section 7.02(e) of the Indenture are met to the reasonable satisfaction of, or waived by, Loan Trustee. (c) Each of U.S. Bank, Loan Trustee, Subordination Agent, each Pass Through Trustee and any other Noteholder agrees that, unless an Event of Default shall have occurred and be continuing, it shall not take any action contrary to, or otherwise in any way interfere with or disturb (and then only in accordance with the Indenture), the quiet enjoyment of the use and possession of the Aircraft, the Airframe, any Engine or any Part by Company or any transferee of any interest in any thereof permitted under the Indenture. (d) Each Noteholder, including, without limitation, Subordination Agent and each Pass Through Trustee, unconditionally agrees with and for the benefit of the parties to this Agreement that it will not directly or indirectly create, incur, assume or suffer to exist any Noteholder Liens, and such Noteholder agrees that it will, at its own cost and expense, promptly take such action as may be necessary to discharge and satisfy in full any such Noteholder Lien; and each Noteholder hereby agrees to indemnify, protect, defend and hold harmless each Indemnitee and Company against Claims in any way resulting from or arising out of a breach by it of its obligations under this Section 6.01(d). (e) By its acceptance of its Equipment Notes, each Noteholder (i) unconditionally agrees for the benefit of Company and Loan Trustee to be bound by and to perform and comply with all of the terms of such Equipment Notes, the Indenture and this Agreement applicable to such Noteholder and (ii) agrees that it will not transfer any Equipment Note (or any part thereof) to any entity unless such entity makes (or is deemed to have made) a representation and warranty as of the date of transfer that either no part of the funds to be used by it for the purchase and holding of such Equipment Note (or any part thereof) constitutes assets of any "employee benefit plan" or that such purchase and holding will not result in a non-exempt prohibited transaction under Section 4975 of the Code and Section 406 of ERISA. (f) Each of Company, Loan Trustee, each Pass Through Trustee and Subordination Agent covenants that (i) until one year and one day after the Series G Equipment Notes have been paid in full, it shall not acquiesce, petition or otherwise invoke or cause or join in invoking or causing the Class G Pass Through Trust or any other Person to invoke the process of any governmental authority for the purpose of commencing or sustaining a case (whether voluntary or not) against the Class G Pass Through Trust under any bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other -17- similar official of the Class G Pass Through Trust or any substantial part of its property or ordering the winding-up or liquidation of the affairs of the Class G Pass Through Trust, (ii) until one year and one day after the Series C Equipment Notes have been paid in full, it shall not acquiesce, petition or otherwise invoke or cause or join in invoking or causing the Class C Pass Through Trust or any other Person to invoke the process of any governmental authority for the purpose of commencing or sustaining a case (whether voluntary or not) against the Class C Pass Through Trust under any bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Class C Pass Through Trust or any substantial part of its property or ordering the winding-up or liquidation of the affairs of the Class C Pass Through Trust and (iii) until one year and one day after the Series D Equipment Notes have been paid in full, it shall not acquiesce, petition or otherwise invoke or cause or join in invoking or causing the Class D Pass Through Trust or any other Person to invoke the process of any governmental authority for the purpose of commencing or sustaining a case (whether voluntary or not) against the Class D Pass Through Trust under any bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Class D Pass Through Trust or any substantial part of its property or ordering the winding-up or liquidation of the affairs of the Class D Pass Through Trust. Section 6.02 Certain Covenants of Company. Company covenants and agrees with Loan Trustee as follows: (a) On and after the Closing, Company will cause to be done, executed, acknowledged and delivered such further acts, conveyances and assurances as Loan Trustee reasonably requests for accomplishing the purposes of this Agreement and the other Operative Documents; provided that any instrument or other document so executed by Company will not expand any obligations or limit any rights of Company in respect of the transactions contemplated by the Operative Documents. (b) Company, at its expense, will cause the Indenture (with the Indenture Supplement covering the Aircraft attached) to be promptly filed and recorded, or filed for recording, with the FAA to the extent permitted under the Transportation Code and the rules and regulations of the FAA thereunder. (c) Company, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Indenture and any financing statements or other instruments as are necessary to maintain, so long as the Indenture is in effect, the perfection of the security interests created by the Indenture or will furnish Loan Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable Loan Trustee to take such action. In addition, Company will pay any and all recording, stamp and other similar taxes payable in the United States, and in any other jurisdiction where the Aircraft is registered, in connection with the execution, delivery, recording, filing, re-recording and refiling of the Indenture or any such financing statements or other instruments. Company will notify Loan Trustee of any change in its jurisdiction of organization (as such term is used in Article 9 of the Uniform Commercial Code as in effect in the State of Delaware) promptly after making such change or in any event -18- within the period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. (d) Company shall at all times maintain its corporate existence except as permitted by Subsection 6.02(e). (e) Company shall not consolidate with or merge into any other Person or convey, transfer or lease substantially all of its assets as an entirety to any Person, unless: (i) the successor or transferee entity shall, if and to the extent required under Section 1110 in order that Loan Trustee continues to be entitled to any benefits of Section 1110 with respect to the Aircraft, be a Citizen of the United States and a Certificated Air Carrier and shall execute and deliver to Loan Trustee an agreement containing the express assumption by such successor or transferee entity of the due and punctual performance and observance of each covenant and condition of the Operative Documents to which Company is a party to be performed or observed by Company; (ii) if the Aircraft is, at the time, registered with the FAA, such Person makes such filings and recordings with the FAA pursuant to the Act, or if the Aircraft is, at the time, not registered with the FAA, such Person makes such filings and recordings with the applicable aviation authority, as are necessary to evidence such consolidation, merger conveyance, transfer or lease; (iii) immediately after giving effect to such transaction, no Event of Default shall have occurred and be continuing; and (iv) Company shall deliver to Policy Provider and Loan Trustee a certificate signed by a Responsible Officer of Company, and an opinion of counsel (which may be the general counsel, a deputy general counsel or an associate general counsel to Company), each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (i) above comply with this Subsection 6.02(e) and that all conditions precedent herein relating to such transaction have been complied with (except that such opinion need not cover the matters referred to in clause (iii) above and may rely, as to factual matters, on a certificate of an officer of Company) and, in the case of such opinion, that such assumption agreement has been duly authorized, executed and delivered by such successor Person and is enforceable against such successor Person in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of Company as an entirety in accordance with this Subsection 6.02(e), the successor Person formed by such consolidation or into which Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, Company under this Agreement and the other Operative Documents with the same effect as if such successor Person had been named as Company herein. -19- (f) Company shall remain a Certificated Air Carrier for as long as and to the extent required under Section 1110 in order that Loan Trustee shall be entitled to any of the benefits of Section 1110 with respect to the Aircraft. ARTICLE 7 MISCELLANEOUS Section 7.01 Notices. Unless otherwise expressly specified or permitted by the terms hereof, all notices required or permitted under the terms and provisions of this Agreement shall be in English and in writing, and any such notice may be given by registered or certified United States mail, courier service or facsimile or any other customary means of communication, and any such notice shall be effective when delivered (or, if delivered by facsimile, upon completion of transmission and confirmation by the sender (by a telephone call to a representative of the recipient or by machine confirmation) that such transmission was received) addressed as follows: if to Company, addressed to: Delta Air Lines, Inc. 1030 Delta Boulevard Atlanta, Georgia 30320 Attention: Treasurer, Dept. 856 Telephone: (404) 714-1724 Facsimile: (404) 715-4862 with a copy to the General Counsel at the same address, but Dept. 971 Telephone: (404) 715-2387 Facsimile: (404) 733-1657 if to U.S. Bank, Loan Trustee, Subordination Agent or any Pass Through Trustee, addressed to: U.S. Bank Trust National Association 225 Asylum Street Goodwin Square Hartford, Connecticut 06103 Attention: Corporate Trust Division Telephone: (860) 244-1844 Facsimile: (860) 244-1881 or if to any subsequent Noteholder, addressed to such Noteholder at its address set forth in the Equipment Note Register maintained pursuant to Section 2.07 of the Indenture. -20- Any party, by notice to the other parties hereto, may designate different addresses for subsequent notices or communications. Whenever the words "notice" or "notify" or similar words are used herein, they mean the provision of formal notice as set forth in this Section 7.01. Section 7.02 Survival of Representations, Warranties, Indemnities, Covenants and Agreements. Except as otherwise provided herein, the representations, warranties, indemnities, covenants and agreements of Company, U.S. Bank, Loan Trustee, Subordination Agent, each Pass Through Trustee and Noteholders herein, and each of their obligations hereunder, shall survive the making of the loans, the transfer of any interest by any Noteholder of its Equipment Note and the expiration or termination (to the extent arising out of acts or events occurring prior to such expiration) of any Operative Documents. SECTION 7.03 GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 7.04 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 7.05 No Oral Modifications or Continuing Waivers; Consents. Subject to Section 9.03 of the Indenture, no terms or provisions of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which the enforcement of the change, waiver, discharge or termination is sought. No such change, waiver, discharge or termination shall be effective unless a signed copy thereof is delivered to Loan Trustee. Each Pass Through Trustee and, by its acceptance of an Equipment Note, each subsequent Noteholder covenants and agrees that it shall not unreasonably withhold its consent to any consent of Loan Trustee requested by Company under the Indenture. Section 7.06 Effect of Headings and Table of Contents. The headings of the various Articles and Sections herein and in the Table of Contents are for convenience of reference only and do not define or limit any of the terms or provisions hereof. Section 7.07 Successors and Assigns. All covenants, agreements, representations and warranties in this Agreement by Company, by U.S. Bank, individually or as Loan Trustee, Subordination Agent or Pass Through Trustee, or by any Noteholder, shall bind and inure to the benefit of and be enforceable by Company, and subject to the terms of Section 6.02(e), its successors and permitted assigns, each Pass Through Trustee and any successor or other trustee under the Pass Through Trust Agreement to which it is a party, Subordination Agent and its successor under the Intercreditor Agreement and Loan Trustee and its successor under the Indenture, whether so expressed or not. -21- Section 7.08 Benefits of Agreement. Subject to the next sentence, nothing in this Agreement, express or implied, gives to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Agreement, except as expressly provided herein. Company agrees and acknowledges that each Liquidity Provider, Policy Provider and each separate or additional trustee appointed pursuant to Section 8.02 of the Indenture shall be third party beneficiaries of the covenants and agreements of Company with respect to the indemnities contained in Section 4.02 and may rely on the covenants and agreements of Company with respect to such indemnities to the same extent as if the covenants and agreements of Company with respect to such indemnities were made to each Liquidity Provider and Policy Provider directly (and in addition Policy Provider shall be a third party beneficiary of the covenants and agreements in its favor contained in Section 6.02(e)(iv) and may rely on such covenants and agreements to the same extent as if such covenants and agreements were made to Policy Provider directly). Section 7.09 Counterparts. This Agreement may be executed in any number of counterparts. Each of the parties hereto shall not be required to execute the same counterpart. Each counterpart of this Agreement including a signature page or pages executed by each of the parties hereto shall be an original counterpart of this Agreement, but all of such counterparts shall together constitute one instrument. Section 7.10 Submission to Jurisdiction. Each of the parties hereto, to the extent it may do so under applicable law, for purposes hereof and of all other Operative Documents hereby (a) irrevocably submits itself to the non-exclusive jurisdiction of the courts of the State of New York sitting in the City of New York and to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto, or their successors or permitted assigns and (b) waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by such courts. -22- IN WITNESS WHEREOF, the parties hereto have caused this Participation Agreement to be duly executed by their respective officers thereunto duly authorized as of the date first above written. DELTA AIR LINES, INC. By: ______________________________________ Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ______________________________________ Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Subordination Agent By: ______________________________________ Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, as Loan Trustee By: ______________________________________ Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, in its individual capacity as set forth herein By: ______________________________________ Name: Title: SCHEDULE I to PARTICIPATION AGREEMENT EQUIPMENT NOTES, PURCHASERS AND ORIGINAL PRINCIPAL AMOUNTS
DESCRIPTION OF ORIGINAL PRINCIPAL PURCHASER EQUIPMENT NOTES MATURITY AMOUNT - ---------------- --------------- ---------------- ------------------- Delta Air Lines Series 2003-1G January 25, 2008 $30,516,479.41 Pass Through Equipment Note Trust 2003-1G EN-1G-001 Delta Air Lines Series 2003-1C January 25, 2008 $ 9,901,472.19 Pass Through Equipment Note Trust 2003-1C EN-1C-001 Delta Air Lines Series 2003-1D January 25, 2008 $ 5,606,724.64 Pass Through Equipment Note Trust 2003-1D EN-1D-001
I-1 SCHEDULE II to PARTICIPATION AGREEMENT TRUST SUPPLEMENTS Trust Supplement No. 2003-1G, dated as of January 30, 2003, between Company and Pass Through Trustee in respect of Delta Air Lines Pass Through Trust 2003-1G. Trust Supplement No. 2003-1C, dated as of January 30, 2003, between Company and Pass Through Trustee in respect of Delta Air Lines Pass Through Trust 2003-1C. Trust Supplement No. 2003-1D, dated as of January 30, 2003, between Company and Pass Through Trustee in respect of Delta Air Lines Pass Through Trust 2003-1D. II-1 EXHIBIT A-1 to PARTICIPATION AGREEMENT FORM OF OPINION OF COUNSEL FOR COMPANY [Intentionally Omitted] A-1-1 EXHIBIT A-2 to PARTICIPATION AGREEMENT FORM OF OPINION OF SPECIAL COUNSEL FOR COMPANY [Intentionally Omitted] A-2-1 EXHIBIT A-3 to PARTICIPATION AGREEMENT FORM OF Section 1110 OPINION OF SPECIAL COUNSEL FOR COMPANY [Intentionally Omitted] A-3-1 EXHIBIT B to PARTICIPATION AGREEMENT FORM OF OPINION OF SPECIAL COUNSEL FOR LOAN TRUSTEE, SUBORDINATION AGENT AND U.S. BANK [Intentionally Omitted] B-1 EXHIBIT C to PARTICIPATION AGREEMENT FORM OF OPINION OF SPECIAL FAA COUNSEL [Intentionally Omitted] C-1 EXHIBIT D-1 to PARTICIPATION AGREEMENT FORM OF OPINION OF SPECIAL COUNSEL FOR PRIMARY LIQUIDITY PROVIDER [Intentionally Omitted] D-1-1 EXHIBIT D-2 to PARTICIPATION AGREEMENT FORM OF OPINION OF GERMAN IN-HOUSE COUNSEL FOR PRIMARY LIQUIDITY PROVIDER [Intentionally Omitted] D-2-1 EXHIBIT D-3 to PARTICIPATION AGREEMENT FORM OF OPINION OF IN-HOUSE COUNSEL FOR ABOVE-CAP LIQUIDITY PROVIDER [Intentionally Omitted] D-3-1 EXHIBIT E to PARTICIPATION AGREEMENT FORM OF MANUFACTURER'S CONSENT [Intentionally Omitted] E-1 EXHIBIT F-1 TO PARTICIPATION AGREEMENT FORM OF OPINION SPECIAL COUNSEL FOR PASS THROUGH TRUSTEES [Intentionally Omitted] F-1-1 EXHIBIT F-2 TO PARTICIPATION AGREEMENT FORM OF OPINION SPECIAL COUNSEL FOR PASS THROUGH TRUSTEES [Intentionally Omitted] F-2-1 EXHIBIT G TO PARTICIPATION AGREEMENT FORM OF OPINION OF IN-HOUSE COUNSEL FOR POLICY PROVIDER [Intentionally Omitted] G-1 EX-4.12 12 g83137exv4w12.txt INDENTURE AND SECURITY AGREEMENT (N195DN) EXHIBIT 4.12 ================================================================================ 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 ----------------- One Boeing 767-332ER Aircraft U.S. Registration No. N195DN ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS Section 1.01 Definitions................................................................................... 4 Section 1.02 Other Definitional Provisions................................................................. 4 ARTICLE II THE EQUIPMENT NOTES Section 2.01 Form of Equipment Notes....................................................................... 5 Section 2.02 Issuance and Terms of Equipment Notes......................................................... 9 Section 2.03 Method of Payment............................................................................ 10 Section 2.04 Withholding Taxes............................................................................ 11 Section 2.05 Application of Payments...................................................................... 11 Section 2.06 Termination of Interest in Collateral........................................................ 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
-i- 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
-ii- 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
-iii- 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 -iv- 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; -2- 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 -3- 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". -4- (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 - ------------------- (1) To be inserted in non-installment Equipment Notes. (2) To be inserted in installment Equipment Notes. -5- 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 -6- 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. - ----------------- (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. -7- 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: -8- 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 - ------------------- (8) To be inserted on installment Equipment Notes. -9- 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 -10- 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 -11- 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 -12- 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. -13- 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. -14- 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 -15- 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 -16- 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 -17- 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 -18- 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 -19- 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 -20- 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 -21- 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 -22- 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; -23- (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 -24- 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). -25- 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 -26- 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 -28- 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 -29- 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 -30- 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 -31- 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 -32- 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; -33- (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 -34- 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 -35- 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 -36- 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 -37- 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 -38- 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; -39- (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. -40- (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 -41- 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 -42- 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 -43- 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 bill of sale respecting such Replacement Airframe and a copy of the original bill of sale or, if the bill 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 -44- 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 bill of sale or, if the bill 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 -45- 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. -46- 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 -47- 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 -48- 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 -49- 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 -50- 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 -51- 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 -52- 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 -53- 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. -54- 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 -55- 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, -56- 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 -57- 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: -58- (i) if to Company, addressed to: Delta Air Lines, Inc. 1030 Delta Boulevard Atlanta, Georgia 30320 Attention: Treasurer, Dept. 856 Telephone: (404) 714-1724 Facsimile: (404) 715-4862 with a copy to the General Counsel at the same address, but Dept. 971 Telephone: (404) 715-2387 Facsimile: (404) 715-1657 (ii) if to Loan Trustee, addressed to: U.S. Bank Trust National Association 225 Asylum Street Goodwin Square Hartford, Connecticut 06103 Attention: Corporate Trust Division Telephone: (860) 244-1844 Facsimile: (860) 244-1881 or if to any Noteholder, addressed to such Noteholder at its address set forth in the Equipment Note Register maintained pursuant to Section 2.07 hereof. Any party, by notice to the other parties hereto, may designate 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, -59- 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. -60- SECTION 10.15 GOVERNING LAW. THIS INDENTURE HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND THIS INDENTURE, ANY INDENTURE SUPPLEMENT AND THE EQUIPMENT NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. Section 10.16 Confidential Information. The term "Confidential Information" means: (a) the existence and terms of any lease of the Airframe or Engines pursuant to Section 7.02(a) and the identity of the Permitted Lessee thereunder; (b) all information obtained in connection with any inspection conducted by Loan Trustee or its representative pursuant to Section 7.03(a); (c) each certification furnished to Loan Trustee pursuant to Sections 7.06(a) and 7.06(b); (d) all information contained in each report furnished to Loan Trustee pursuant to Section 7.06(e); and (e) all information regarding the Warranty Rights. All Confidential Information shall be held confidential by Loan Trustee and each Noteholder and each affiliate, agent, officer, director, or employee of any thereof and shall not be furnished or disclosed by any of them to anyone other than (i) Loan Trustee or any Noteholder and (ii) their respective bank examiners, auditors, accountants, agents and legal counsel, and except as may be required by an order of any court or administrative agency or by any statute, rule, regulation or order of any governmental authority. Section 10.17 Submission to Jurisdiction. Each of the parties hereto, and by acceptance of Equipment Notes, each Noteholder, to the extent it may do so under applicable law, for purposes hereof and of all other Operative Agreements hereby (a) irrevocably submits itself to the non-exclusive jurisdiction of the courts of the State of New York sitting in the City of New York and to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Indenture, the subject matter hereof or any of the transactions contemplated hereby brought by any party or parties hereto or thereto, or their successors or permitted assigns and (b) waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Indenture or the Equipment Notes or the subject matter hereof or any of the transactions contemplated hereby may not be enforced in or by such courts. -61- IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed by their respective officers thereof duly authorized, as of the date first above written. DELTA AIR LINES, INC. By: __________________________________ Name: Title: U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Loan Trustee By: __________________________________ Name: Title: EXHIBIT A to INDENTURE AND SECURITY AGREEMENT INDENTURE SUPPLEMENT NO. ___ INDENTURE SUPPLEMENT NO. __ , dated _____________, ____ ("Indenture Supplement"), between DELTA AIR LINES, INC. ("Company") and U.S. BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as Loan Trustee under the Indenture (each as hereinafter defined). W I T N E S S E T H: WHEREAS, the Indenture and Security Agreement (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 EX-5.1 13 g83137exv5w1.txt OPINION OF CADWALADER, WICKERSHAM & TAFT LLP EXHIBIT 5.1 [Letterhead of Cadwalader, Wickersham & Taft LLP] July 10, 2003 Delta Air Lines, Inc. Hartsfield Atlanta International Airport Atlanta, GA 30320 Re: Registration Statement on Form S-4 Ladies and Gentlemen: We have acted as special counsel to Delta Air Lines, Inc., a Delaware corporation (the "Company"), in connection with the Registration Statement on Form S-4 (the "Registration Statement") filed on the date hereof with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act") and the prospectus included therein (the "Prospectus"). The Registration Statement relates to the exchange offer (the "Exchange Offer") by the Company of Pass Through Certificates, Series 2003-1G (the "New Class G Certificates") for Pass Through Certificates, Series 2003-1G (the "Old Class G Certificates") originally issued pursuant to applicable exemptions from registration under the Securities Act. The face amount of the Old Class G Certificates was $391,583,000 and the New Class G Certificates will be issued in an face amount of $391,583,000 (and aggregate Pool Balance of $381,789,096) pursuant to (i) the Pass Through Trust Agreement (the "Basic Agreement"), dated as of November 16, 2000, between the Company and U.S. Bank Trust National Association (as successor to State Street Bank and Trust Company of Connecticut, National Association), as Pass Through Trustee (the "Trustee") and (ii) the Trust Supplement No. 2003-1G, dated as of January 30, 2003, to the Basic Agreement between the Company and U.S. Bank Trust National Association (the Basic Agreement as so supplemented, the "Trust Agreement"). Capitalized terms used and not otherwise defined herein have the respective meanings ascribed to such terms in the Registration Statement. In rendering our opinions set forth below, we have examined and relied upon the originals, copies or specimens, certified or otherwise identified to our satisfaction, of the Registration Statement and the Trust Agreement and such certificates, corporate and public records, agreements and other instruments and other documents, including, among other things, the documents delivered on the date hereof. In such examination we have assumed the genuineness of all signatures, the authenticity of all documents, agreements and instruments submitted to us as originals, the conformity to original documents, agreements and instruments of all documents, agreements and instruments submitted to us as copies or specimens, the authenticity of such documents, agreements and instruments submitted to us as copies or specimens and the accuracy of the matters set forth in the documents, agreements and instruments we reviewed and that all parties will comply with all of their covenants and obligations under the applicable documents. As to any facts material to such opinions that were not known to us, we have relied upon statements and representations of officers and other representatives of the Company and the representations and warranties contained in the Trust Agreement as to factual matters contained in or made pursuant to such documents, as we have deemed appropriate as a basis for the opinions expressed below. Except as expressly set forth herein, we have not undertaken any independent investigation (including, without limitation, conducting any review, search or investigation of any public files, records or dockets) to determine the existence or absence of the facts that are material to our opinions, and no inference as to our knowledge concerning such facts should be drawn from our reliance on the representations and warranties of the Company in connection with the preparation and delivery of this letter. Based on and subject to the foregoing and subject to the assumptions and qualifications set forth below, we are of the opinion that, with respect to the New Class G Certificates, when the execution, authentication and delivery of the New Class G Certificates by the Trustee have been authorized by all necessary corporate action of the Company and the Trustee, and the New Class G Certificates have been duly executed, authenticated, issued and delivered by the Trustee in exchange for the Old Class G Certificates in accordance with the Trust Agreement and as described in the Registration Statement and the Prospectus, the New Class G Certificates will constitute valid and binding obligations of the Trustee enforceable against the Trustee in accordance with their terms and the holders of the New Class G Certificates will be entitled to the benefits of the Trust Agreement. Our opinions set forth herein are subject to: (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, receivership and other laws affecting creditors' rights generally, (ii) general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), (iii) an implied covenant of good faith, reasonableness and fair dealing, and standards of materiality and (iv) in the case of indemnity, contribution and exculpatory provisions and provisions relating to submission to jurisdiction, venue or service of process, applicable law and public policy considerations. Our opinion expressed above is limited to the laws of the State of New York and the Federal Laws of the United States of America, except that we express no opinion as to the securities laws of any state or foreign jurisdiction. Our opinions expressed herein, as applicable, are limited to the laws of the State of New York governing the enforceability of contracts as such. This opinion letter is limited to the matters stated, and no opinion is implied or may be inferred beyond the matters expressly stated herein. The opinions expressed herein are rendered only as of the date hereof and we assume no responsibility to advise you of changes in law, facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter or modify the opinions expressed herein. We hereby consent to the filing of this letter as an Exhibit to the Registration Statement and to the references to our firm under the heading "Legal Opinions" in the Prospectus included in such Registration Statement. This consent is not to be construed as an admission that we are a person whose consent is required to be filed with the Registration Statement under the provisions of the Securities Act. Very truly yours, /s/ Cadwalader, Wickersham & Taft LLP EX-15.1 14 g83137exv15w1.txt LETTER FROM DELOITTE & TOUCHE EXHIBIT 15.1 July 8, 2003 Delta Air Lines, Inc. Atlanta, Georgia We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Delta Air Lines, Inc. and subsidiaries for the three-month periods ended March 31, 2003 and 2002, as indicated in our report dated April 17, 2003; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which was included in your Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, is being incorporated by reference in this Registration Statement. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. /s/ Deloitte & Touche LLP Atlanta, Georgia EX-23.1 15 g83137exv23w1.txt CONSENT OF DELOITTE & TOUCHE EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Delta Air Lines, Inc. on Form S-4 of our report dated January 31, 2003 (which report expresses an unqualified opinion and includes explanatory paragraphs relating to (1) the Company's change in its method of accounting for goodwill and other intangible assets to conform with Statement of Financial Accounting Standards No. 142 and (2) the application of procedures relating to certain revised disclosures in Notes 5, 9, 17 and 21 related to the 2001 and 2000 consolidated financial statements that were audited by other auditors who have ceased operations and for which we have expressed no opinion or other form of assurance other than with respect to such disclosures), incorporated by reference in the Annual Report on Form 10-K of Delta Air Lines, Inc. for the year ended December 31, 2002 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche LLP Atlanta, Georgia July 8, 2003 EX-23.2 16 g83137exv23w2.txt CONSENT OF KPMG LLP EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT The Board of Directors Ambac Assurance Corporation: We consent to the incorporation by reference in the registration statement on Form S-4 of Delta Air Lines, Inc. of our report dated January 21, 2003 on the consolidated financial statements of Ambac Assurance Corporation and subsidiaries as of December 31, 2002 and 2001, and for each of the years in the three-year period ended December 31, 2002, which report appears in the Annual Report on Form 10-K of Ambac Financial Group, Inc. which was filed with the Securities and Exchange Commission on March 28, 2003. /s/ KPMG LLP New York, New York July 10, 2003 EX-23.4 17 g83137exv23w4.txt CONSENT OF AIRCRAFT INFORMATION SYSTEMS, INC. EXHIBIT 23.4 [Aircraft Information Services, Inc. Letterhead] Delta Air Lines, Inc. Hartsfield International Airport Atlanta, GA 30320 Attn: Kenneth Morge Manager, Capital Markets RE: Delta Air Lines, Inc. ("Delta") two Boeing 737-832 and ten Boeing 767-332ER Aircraft Ladies and Gentleman: We consent (i) to the use of the report prepared by us with respect to the aircraft referred to in the Prospectus included in Delta's Registration Statement Form S-4 relating to the exchange of Pass Through Certificates, Series 2003-1G which have been registered under the Securities Act of 1933 for any and all outstanding Pass Through Certificates, Series 2003-1G, (ii) to the summary of such report in the Prospectus under the headings "Summary-Equipment Notes and the Aircraft," "Risk Factors-Risk Factors Relating to the Certificates and the Exchange Offer-Appraisals and Realizable Value of Aircraft," and "Description of the Aircraft and the Appraisals-The Appraisals" and (iii) to references to our Firm under the headings "Description of the Aircraft and the Appraisals-The Appraisals" and "Appraisers". AIRCRAFT INFORMATION SERVICES, INC. /s/ John McNicol John McNicol Vice President Appraisals & Forecasts EX-23.5 18 g83137exv23w5.txt CONSENT OF AV SOLUTIONS, INC. EXHIBIT 23.5 [AvSOLUTIONS Letterhead] Delta Air Lines, Inc. Hartsfield International Airport Atlanta, GA 30320 Attn: Kenneth Morge Manager, Capital Markets RE: Delta Air Lines, Inc. ("Delta") two Boeing 737-832 and ten Boeing 767-332ER Aircraft Ladies and Gentleman: We consent (i) to the use of the report prepared by us with respect to the aircraft referred to in the Prospectus included in Delta's Registration Statement Form S-4 relating to the exchange of Pass Through Certificates, Series 2003-1G which have been registered under the Securities Act of 1933 for any and all outstanding Pass Through Certificates, Series 2003-1G, (ii) to the summary of such report in the Prospectus under the headings "Summary-Equipment Notes and the Aircraft," "Risk Factors-Risk Factors Relating to the Certificates and the Exchange Offer-Appraisals and Realizable Value of Aircraft," and "Description of the Aircraft and the Appraisals-The Appraisals" and (iii) to references to our Firm under the headings "Description of the Aircraft and the Appraisals-The Appraisals" and "Appraisers". AvSOLUTIONS, Inc. /s/ Scott E. Daniels Scott E. Daniels Vice President, Asset Management EX-23.6 19 g83137exv23w6.txt CONSENT OF BK ASSOCIATES, INC. EXHIBIT 23.6 [BK Associates, Inc. Letterhead] Delta Air Lines, Inc. Hartsfield International Airport Atlanta, GA 30320 Attn: Kenneth Morge Manager, Capital Markets RE: Delta Air Lines, Inc. ("Delta") two Boeing 737-832 and ten Boeing 767-332ER Aircraft Ladies and Gentleman: We consent (i) to the use of the report prepared by us with respect to the aircraft referred to in the Prospectus included in Delta's Registration Statement Form S-4 relating to the exchange of Pass Through Certificates, Series 2003-1G which have been registered under the Securities Act of 1933 for any and all outstanding Pass Through Certificates, Series 2003-1G, (ii) to the summary of such report in the Prospectus under the headings "Summary-Equipment Notes and the Aircraft," "Risk Factors-Risk Factors Relating to the Certificates and the Exchange Offer-Appraisals and Realizable Value of Aircraft," and "Description of the Aircraft and the Appraisals-The Appraisals" and (iii) to references to our Firm under the headings "Description of the Aircraft and the Appraisals-The Appraisals" and "Appraisers". BK ASSOCIATES, INC. /s/ R. L. Britton R. L. Britton Vice President ISTAT Senior Certified Appraiser EX-24.1 20 g83137exv24w1.txt POWERS OF ATTORNEY Exhibit 24.1 POWER OF ATTORNEY I hereby constitute and appoint M. Michele Burns and James M. Whitehurst, and each of them separately, my true and lawful attorneys-in-fact, with full power of substitution, for me and in my name, in any and all capacities, to sign one or more registration statements on Form S-4 in such form as said attorneys deem appropriate or advisable, to be filed with the Securities and Exchange Commission by Delta Air Lines, Inc. (the "Company") in respect of the issuance of up to $391,583,000 aggregate principal amount of insured pass through certificates, Series 2003-1G, of the Company, and all amendments to such registration statement (including post-effective amendments and any related registration statements filed pursuant to Rule 462), and to file the same with the Securities and Exchange Commission. IN WITNESS WHEREOF, I have hereunto signed this power of attorney as of this 12th day of June, 2003. /s/ Leo F. Mullin ------------------------------- Leo F. Mullin Delta Air Lines, Inc. POWER OF ATTORNEY I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and James M. Whitehurst, and each of them separately, my true and lawful attorneys-in-fact, with full power of substitution, for me and in my name, in any and all capacities, to sign one or more registration statements on Form S-4 in such form as said attorneys deem appropriate or advisable, to be filed with the Securities and Exchange Commission by Delta Air Lines, Inc. (the "Company") in respect of the issuance of up to $391,583,000 aggregate principal amount of insured pass through certificates, Series 2003-1G, of the Company, and all amendments to such registration statement (including post-effective amendments and any related registration statements filed pursuant to Rule 462), and to file the same with the Securities and Exchange Commission. IN WITNESS WHEREOF, I have hereunto signed this power of attorney as of this 12th day of June, 2003. /s/ Edward H. Budd ------------------------------- Director Delta Air Lines, Inc. POWER OF ATTORNEY I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and James M. Whitehurst, and each of them separately, my true and lawful attorneys-in-fact, with full power of substitution, for me and in my name, in any and all capacities, to sign one or more registration statements on Form S-4 in such form as said attorneys deem appropriate or advisable, to be filed with the Securities and Exchange Commission by Delta Air Lines, Inc. (the "Company") in respect of the issuance of up to $391,583,000 aggregate principal amount of insured pass through certificates, Series 2003-1G, of the Company, and all amendments to such registration statement (including post-effective amendments and any related registration statements filed pursuant to Rule 462), and to file the same with the Securities and Exchange Commission. IN WITNESS WHEREOF, I have hereunto signed this power of attorney as of this 12th day of June, 2003. /s/ Geroge M.C. Fisher ------------------------------- Director Delta Air Lines, Inc. POWER OF ATTORNEY I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and James M. Whitehurst, and each of them separately, my true and lawful attorneys-in-fact, with full power of substitution, for me and in my name, in any and all capacities, to sign one or more registration statements on Form S-4 in such form as said attorneys deem appropriate or advisable, to be filed with the Securities and Exchange Commission by Delta Air Lines, Inc. (the "Company") in respect of the issuance of up to $391,583,000 aggregate principal amount of insured pass through certificates, Series 2003-1G, of the Company, and all amendments to such registration statement (including post-effective amendments and any related registration statements filed pursuant to Rule 462), and to file the same with the Securities and Exchange Commission. IN WITNESS WHEREOF, I have hereunto signed this power of attorney as of this 12th day of June, 2003. /s/ David R. Goode ------------------------------- Director Delta Air Lines, Inc. POWER OF ATTORNEY I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and James M. Whitehurst, and each of them separately, my true and lawful attorneys-in-fact, with full power of substitution, for me and in my name, in any and all capacities, to sign one or more registration statements on Form S-4 in such form as said attorneys deem appropriate or advisable, to be filed with the Securities and Exchange Commission by Delta Air Lines, Inc. (the "Company") in respect of the issuance of up to $391,583,000 aggregate principal amount of insured pass through certificates, Series 2003-1G, of the Company, and all amendments to such registration statement (including post-effective amendments and any related registration statements filed pursuant to Rule 462), and to file the same with the Securities and Exchange Commission. IN WITNESS WHEREOF, I have hereunto signed this power of attorney as of this 12th day of June, 2003. /s/ Gerald Grinstein ------------------------------- Director Delta Air Lines, Inc. POWER OF ATTORNEY I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and James M. Whitehurst, and each of them separately, my true and lawful attorneys-in-fact, with full power of substitution, for me and in my name, in any and all capacities, to sign one or more registration statements on Form S-4 in such form as said attorneys deem appropriate or advisable, to be filed with the Securities and Exchange Commission by Delta Air Lines, Inc. (the "Company") in respect of the issuance of up to $391,583,000 aggregate principal amount of insured pass through certificates, Series 2003-1G, of the Company, and all amendments to such registration statement (including post-effective amendments and any related registration statements filed pursuant to Rule 462), and to file the same with the Securities and Exchange Commission. IN WITNESS WHEREOF, I have hereunto signed this power of attorney as of this 12th day of June, 2003. /s/ James M. Kilts ------------------------------- Director Delta Air Lines, Inc. POWER OF ATTORNEY I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and James M. Whitehurst, and each of them separately, my true and lawful attorneys-in-fact, with full power of substitution, for me and in my name, in any and all capacities, to sign one or more registration statements on Form S-4 in such form as said attorneys deem appropriate or advisable, to be filed with the Securities and Exchange Commission by Delta Air Lines, Inc. (the "Company") in respect of the issuance of up to $391,583,000 aggregate principal amount of insured pass through certificates, Series 2003-1G, of the Company, and all amendments to such registration statement (including post-effective amendments and any related registration statements filed pursuant to Rule 462), and to file the same with the Securities and Exchange Commission. IN WITNESS WHEREOF, I have hereunto signed this power of attorney as of this 12th day of June, 2003. /s/ John F. Smith, Jr. ------------------------------- Director Delta Air Lines, Inc. POWER OF ATTORNEY I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and James M. Whitehurst, and each of them separately, my true and lawful attorneys-in-fact, with full power of substitution, for me and in my name, in any and all capacities, to sign one or more registration statements on Form S-4 in such form as said attorneys deem appropriate or advisable, to be filed with the Securities and Exchange Commission by Delta Air Lines, Inc. (the "Company") in respect of the issuance of up to $391,583,000 aggregate principal amount of insured pass through certificates, Series 2003-1G, of the Company, and all amendments to such registration statement (including post-effective amendments and any related registration statements filed pursuant to Rule 462), and to file the same with the Securities and Exchange Commission. IN WITNESS WHEREOF, I have hereunto signed this power of attorney as of this 12th day of June, 2003. /s/ Joan E. Spero ------------------------------- Director Delta Air Lines, Inc. POWER OF ATTORNEY I hereby constitute and appoint Leo F. Mullin, M. Michele Burns and James M. Whitehurst, and each of them separately, my true and lawful attorneys-in-fact, with full power of substitution, for me and in my name, in any and all capacities, to sign one or more registration statements on Form S-4 in such form as said attorneys deem appropriate or advisable, to be filed with the Securities and Exchange Commission by Delta Air Lines, Inc. (the "Company") in respect of the issuance of up to $391,583,000 aggregate principal amount of insured pass through certificates, Series 2003-1G, of the Company, and all amendments to such registration statement (including post-effective amendments and any related registration statements filed pursuant to Rule 462), and to file the same with the Securities and Exchange Commission. IN WITNESS WHEREOF, I have hereunto signed this power of attorney as of this 12th day of June, 2003. /s/ Andrew J. Young ------------------------------- Director Delta Air Lines, Inc. EX-25.1 21 g83137exv25w1.txt STATEMENT OF ELIGIBILITY EXHIBIT 25.1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2)___ ------------------------------------------------------- U.S. BANK TRUST NATIONAL ASSOCIATION (Exact name of Trustee as specified in its charter) 41-1973763 I.R.S. Employer Identification No. 300 EAST DELAWARE AVENUE, 8TH FLOOR WILMINGTON, DELAWARE 19809 (Address of principal executive offices) (Zip Code) Patrick J. Crowley U.S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, NY 10005 Telephone (212) 361-2505 (Name, address and telephone number of agent for service) DELTA AIR LINES, INC. (Exact name of Registrant as specified in its charter)
DELAWARE 58-0218548 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1030 DELTA BOULEVARD ATLANTA, GEORGIA 30354 (Address of Principal Executive Offices) (Zip Code) DELTA AIR LINES, INC. PASS THROUGH CERTIFICATES, SERIES 2003-1G (Title of the Indenture Securities) ================================================================================ FORM T-1 ITEM 1. GENERAL INFORMATION. Furnish the following information as to the Trustee. a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency Washington, D.C. b) Whether it is authorized to exercise corporate trust powers. Yes ITEM 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation. None USE ONE OF FOLLOWING RESPONSES ONLY ITEMS 3-15 Not applicable because, to the best of Trustee's knowledge, the Trustee is not a trustee under any other indenture under which any other securities or certificates of interest or participation in any other securities of the obligor are outstanding and there is not, nor has there been, a default with respect to securities issued under the indenture to be qualified. Item 16. LIST OF EXHIBITS: List below all exhibits filed as a part of this statement of eligibility and qualification. 1. A copy of the Articles of Association of the Trustee now in effect, incorporated herein by reference to Exhibit 1 of Form T-1, Document 6 of Registration No. 333-84320. 2. A copy of the certificate of authority of the Trustee to commence business, incorporated herein by reference to Exhibit 2 of Form T-1, Document 6 of Registration No. 333-84320. 3. A copy of the certificate of authority of the Trustee to exercise corporate trust powers, incorporated herein by reference to Exhibit 3 of Form T-1, Document 6 of Registration No. 333-84320. 4. A copy of the existing bylaws of the Trustee, as now in effect, incorporated herein by reference to Exhibit 4 of Form T-1, Document 6 of Registration No. 333-84320. 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, incorporated herein by reference to Exhibit 6 of Form T-1, Document 6 of Registration No. 333-84320. 2 7. Report of Condition of the Trustee as of March 31, 2003, published pursuant to law or the requirements of its supervising or examining authority, attached as Exhibit 7. 8. Not applicable. 9. Not applicable. 3 SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Boston, Commonwealth of Massachusetts, on the 10th day of July, 2003. U.S. BANK TRUST NATIONAL ASSOCIATION By: /s/ Julie A. Balerna ---------------------------------- Name: Julie A. Balerna Title: Assistant Vice President 4 Exhibit 7 U.S. BANK TRUST NATIONAL ASSOCIATION STATEMENT OF FINANCIAL CONDITION AS OF 3/31/2003 ($000'S)
3/31/2003 --------- ASSETS Cash and Due From Depository Institutions $ 348,346 Fixed Assets 1,448 Intangible Assets 123,934 Other Assets 45,296 --------- TOTAL ASSETS $ 519,024 LIABILITIES Other Liabilities $ 13,827 --------- TOTAL LIABILITIES $ 13,827 EQUITY Common and Preferred Stock $ 1,000 Surplus 505,932 Undivided Profits (1,735) --------- TOTAL EQUITY CAPITAL $ 505,197 TOTAL LIABILITIES AND EQUITY CAPITAL $ 519,024 - ---------------------------------------------------------------
To the best of the undersigned's determination, as of this date the above financial information is true and correct. U.S. Bank Trust National Association By: /s/ Julie A. Balerna --------------------------- Name: Julie A. Balerna Title: Assistant Vice President Date: July 10, 2003 5 EX-99.1 22 g83137exv99w1.txt FORM OF LETTER OF TRANSMITTAL EXHIBIT 99.1 LETTER OF TRANSMITTAL FOR OFFER TO EXCHANGE PASS THROUGH CERTIFICATES, SERIES 2003-1G, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OUTSTANDING PASS THROUGH CERTIFICATES, SERIES 2003-1G, OF DELTA AIR LINES, INC. --------------------- PURSUANT TO THE PROSPECTUS, DATED , 2003 - -------------------------------------------------------------------------------- THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2003, UNLESS THE EXCHANGE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD CLASS G CERTIFICATES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE EXPIRATION DATE. - -------------------------------------------------------------------------------- To the Exchange Agent: U.S. BANK TRUST NATIONAL ASSOCIATION c/o U.S. Bank Corporate Trust Services 180 East Fifth Street St. Paul, MN 55101 Attention: Specialized Finance By Facsimile: (651) 244-1537 Confirm by Telephone: (800) 934-6802 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW CLASS G CERTIFICATES FOR THEIR OLD CLASS G CERTIFICATES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR OLD CLASS G CERTIFICATES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. By execution hereof, the undersigned acknowledges receipt of the prospectus, dated , 2003 (the "Prospectus"), of Delta Air Lines, Inc. (the "Company"), which, together with this Letter of Transmittal and instructions hereto (the "Letter of Transmittal"), constitute the Company's offer to exchange (the "Exchange Offer") Pass Through Certificates, Series 2003-1G (the "New Class G Certificates"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a registration statement of which the Prospectus forms a part, for any and all of its outstanding Pass Through Certificates, Series 2003-1G (the "Old Class G Certificates"), upon the terms and subject to the conditions set forth in the Prospectus. For each Old Class G Certificate accepted for exchange, the Holder of such Old Class G Certificate will receive a New Class G Certificate of the same class having a principal amount equal to that of the surrendered Old Class G Certificate. This Letter of Transmittal is to be completed by Holders (as defined below) if: (i) certificates representing Old Class G Certificates are to be physically delivered to the Exchange Agent herewith by Holders; (ii) tender of Old Class G Certificates is to be made by book-entry transfer to the Exchange Agent's account at The Depository Trust Company (the "DTC") pursuant to the procedures set forth in the Prospectus under "The Exchange Offer--Book-Entry Transfer" by any financial institution that is a participant in DTC and whose name appears on a security position listing as the owner of Old Class G Certificates if an Agent's Message (as defined below) is not delivered; or (iii) tender of Old Class G Certificates is to be made according to the guaranteed delivery procedures set forth in the Prospectus under "The Exchange Offer--Guaranteed Delivery Procedures". Tenders by book-entry transfer may also be made by delivering an Agent's Message in lieu of this Letter of Transmittal. The term "Agent's Message" means a message, transmitted by DTC and received by the Exchange Agent and forming part of a book-entry confirmation, that states that DTC has received an express acknowledgment from a participant tendering Old Class G Certificates that are the subject of such book-entry confirmation that such participant has received and agrees to be bound by the terms of the Letter of Transmittal, and that the Company may enforce such agreement against such participant. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. The term "Holder" with respect to the Exchange Offer means any person in whose name Old Class G Certificates are registered on the Trustee's books or any other person who has obtained a properly completed bond power from the registered Holder, or any person whose Old Class G Certificates are held of record by DTC and who desires to deliver such Old Class G Certificates by book-entry transfer at DTC. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. All capitalized terms used but not defined herein shall have the meanings given to them in the Prospectus, unless the context otherwise indicates. The instructions included with this Letter of Transmittal must be followed. Questions and requests for assistance or for additional copies of the Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Exchange Agent. See Instruction 8 herein. HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD CLASS G CERTIFICATES MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY. -2- List below the Old Class G Certificates to which this Letter of Transmittal relates. If the space provided below is inadequate, list the certificate numbers and principal amounts of Old Class G Certificates on a separately signed schedule and affix the schedule to this Letter of Transmittal. Tenders of Old Class G Certificates will be accepted only in principal amounts equal to $100,000 or integral multiples thereof. DESCRIPTION OF OLD CLASS G CERTIFICATES
ORIGINAL AGGREGATE CERTIFICATE NUMBER(S)* PRINCIPAL AMOUNT NAME(S) AND ADDRESSES OF HOLDER(S) (ATTACH SIGNED LIST IF TENDERED (PLEASE FILL IN IF BLANK) NECESSARY) (IF LESS THAN ALL)** - --------------------------------- ---------------------- -------------------- _________________________________ ______________________ ____________________ _________________________________ ______________________ ____________________ _________________________________ ______________________ ____________________ _________________________________ ______________________ ____________________
TOTAL ORIGINAL PRINCIPAL AMOUNT OF OLD CLASS G CERTIFICATES TENDERED * Need not be completed by Holders tendering Old Class G Certificates by book-entry transfer. ** Need not be completed by Holders who wish to tender with respect to all Old Class G Certificates listed. See Instruction 2. [ ] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OLD CLASS G CERTIFICATES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT DTC: Name of Tendering Institution: _________________________________________________ DTC Book-Entry Account No.: ____________________________________________________ Transaction Code No.: __________________________________________________________ If Holders desire to tender Old Class G Certificates pursuant to the Exchange Offer and (i) certificates representing such Old Class G Certificates are not immediately available, or (ii) this Letter of Transmittal, certificates representing such Old Class G Certificates or any other required documents cannot be delivered to the Exchange Agent prior to the Expiration Date, or (iii) the procedures for book-entry transfer cannot be completed prior to the Expiration Date, such Holders may effect a tender of such Old Class G Certificates in accordance with the guaranteed delivery procedures set forth in the Prospectus under "The Exchange Offer--Guaranteed Delivery Procedures." Holders following the guaranteed delivery procedure must still fully complete, execute and deliver this Letter of Transmittal or a facsimile hereof. -3- DTC participants may also accept the Exchange Offer by submitting the notice of guaranteed delivery through the DTC Automated Tender Offer Program. [ ] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OLD CLASS G CERTIFICATES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT: Name(s) of Holder(s) of Old Class G Certificates: ______________________________ Window Ticket No. (if any): ____________________________________________________ Date of Execution of Notice of Guaranteed Delivery: ____________________________ Name of Eligible Institution that Guaranteed Delivery: _________________________ If Delivered by Book-Entry Transfer: ___________________________________________ Name of Tendering Institution: _________________________________________________ DTC Book-Entry Account No.: ____________________________________________________ Transaction Code No.: __________________________________________________________ [ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO HOLDS OLD CLASS G CERTIFICATES ACQUIRED FOR YOUR OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES AND WISH TO RECEIVE ADDITIONAL COPIES OF THE PROSPECTUS AND OF ANY AMENDMENTS OR SUPPLEMENTS THERETO FOR USE IN CONNECTION WITH RESALES OF NEW CLASS G CERTIFICATES RECEIVED FOR YOUR OWN ACCOUNT IN EXCHANGE FOR SUCH OLD CLASS G CERTIFICATES. Name: __________________________________________________________________________ Address: _______________________________________________________________________ [ ] CHECK HERE IF TENDERED OLD CLASS G CERTIFICATES ARE ENCLOSED HEREWITH -4- Ladies and Gentlemen: The undersigned hereby tender(s) to the Company, upon the terms and subject to the conditions of the Exchange Offer, the aggregate principal amount of Old Class G Certificates indicated above. Subject to and effective upon the acceptance for exchange of the principal amount of Old Class G Certificates tendered in accordance with this Letter of Transmittal, the undersigned sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to the Old Class G Certificates tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as the agent of the Company and as Pass Through Trustee under the Pass Through Trust Agreements for the Old Class G Certificates and the New Class G Certificates) with respect to the tendered Old Class G Certificates with full power of substitution to (i) deliver certificates for such Old Class G Certificates to the Company, or transfer ownership of such Old Class G Certificates on the account books maintained by DTC, together, in either such case, with all accompanying evidences of transfer and authenticity to, or upon the order of, the Company and (ii) present such Old Class G Certificates for transfer on the books of the Registrar and receive all benefits and otherwise exercise all rights of beneficial ownership of such Old Class G Certificates, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed irrevocable and coupled with an interest. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Old Class G Certificates tendered hereby and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by the Company. The undersigned also acknowledges that this Exchange Offer is being made in reliance upon interpretations by the staff of the Securities and Exchange Commission that the New Class G Certificates issued pursuant to the Exchange Offer in exchange for the Old Class G Certificates may be offered for resale, resold or otherwise transferred by any holder thereof (other than (i) a broker-dealer who purchased such Old Class G Certificates directly from the Trustee for its own account or (ii) a person that is an "affiliate", as defined in Rule 405 under the Securities Act, of the Company or of any Trustee) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holder is acquiring such New Class G Certificates in its ordinary course of business and has no arrangements or understanding with any person to participate in the distribution of the New Class G Certificates. If a broker-dealer would receive New Class G Certificates for its own account in exchange for Old Class G Certificates, where such Old Class G Certificates were not acquired as a result of market-making or other trading activities, such broker-dealer will not be able to participate in the Exchange Offer. The undersigned represents that (i) the New Class G Certificates acquired pursuant to the Exchange Offer are being obtained in the ordinary course of such holder's business, (ii) such holder has no arrangements or understanding with any person to participate in the distribution of the New Class G Certificates and (iii) such holder is not an "affiliate," as -5- defined under Rule 405 of the Securities Act, of the Company or of any Trustee or if such holder is an affiliate, that such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of New Class G Certificates. If the undersigned is a broker-dealer that will receive New Class G Certificates for its own account in exchange for Old Class G Certificates that were acquired as a result of market-making or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such New Class G Certificates; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the assignment and transfer of the Old Class G Certificates tendered hereby. For purposes of the Exchange Offer, the Company shall be deemed to have accepted validly tendered Old Class G Certificates when the Company has given oral or written notice (such notice, if given orally, to be confirmed in writing) thereof to the Exchange Agent. If any tendered Old Class G Certificates are not accepted for exchange pursuant to the Exchange Offer for any reason, certificates for any such unaccepted Old Class G Certificates will be returned (except as noted below with respect to tenders through DTC), without expense, to the undersigned at the address shown below or at such different address as may be indicated under "Special Issuance Instructions" as promptly as practicable after the Expiration Date. All authority conferred or agreed to be conferred by this Letter of Transmittal shall survive the death or incapacity of the undersigned, and every obligation of the undersigned under this Letter of Transmittal shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned. The undersigned understands that tenders of Old Class G Certificates pursuant to the procedures described under the caption "The Exchange Offer--Procedures for Tendering" in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. All questions as to form, validity, eligibility (including time of receipt), acceptance and withdrawal of tendered Old Class G Certificates will be determined by the Company in its sole discretion, which determination will be final and binding. Unless otherwise indicated under "Special Issuance Instructions", please issue the certificates representing the New Class G Certificates issued in exchange for the Old Class G Certificates accepted for exchange, and return any Old Class G Certificates not tendered or not exchanged, in the name of the undersigned (or, in the case of a book-entry delivery of Old Class G Certificates by DTC, by credit to the account at DTC). Similarly, unless otherwise indicated under "Special Delivery Instructions", please send the certificates representing New Class G Certificates issued in exchange for the Old Class G Certificates accepted for exchange, and any -6- certificates representing Old Class G Certificates not tendered or not exchanged, and accompanying documents, as appropriate, to the undersigned at the address shown below the undersigned's signatures, unless, in either event, tender is being made through DTC. If both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the certificates representing the New Class G Certificates issued in exchange for the Old Class G Certificates accepted for exchange, and return any Old Class G Certificates not tendered or not exchanged, in the name(s) of, and send said certificates to, the person(s) so indicated. The undersigned recognizes that the Company has no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Old Class G Certificates from the name of the registered holder(s) thereof if the Company does not accept for exchange any of the Old Class G Certificates so tendered. -7- PLEASE SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS OF OLD CLASS G CERTIFICATES REGARDLESS OF WHETHER OLD CLASS G CERTIFICATES ARE BEING PHYSICALLY DELIVERED HEREWITH) This Letter of Transmittal must be signed by the Holder(s) of Old Class G Certificates exactly as their name(s) appear(s) on certificates(s) for Old Class G Certificates or, if tendered by a participant in DTC, exactly as such participant's name appears on a security position listing as the owner of Old Class G Certificates, or by person(s) authorized to become registered Holder(s) by endorsements and documents transmitted with this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below under "Capacity" and submit evidence satisfactory to the Company of such person's authority to so act. See Instruction 3 herein. If the signature appearing below is not of the registered Holder(s) of the Old Class G Certificates, then the registered Holder(s) must sign a valid proxy. X _____________________________________ Date: ______________________________ X _____________________________________ Date: ______________________________ SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY Name(s): ______________________________ Address: ___________________________ ______________________________ ___________________________ (PLEASE PRINT) (INCLUDING ZIP CODE) Capacity: _____________________________ Area Code and Telephone No.: _______ Social Security No.: __________________ -8- PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN) CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION ________________________________________________________________________________ NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES ________________________________________________________________________________ ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF FIRM ________________________________________________________________________________ AUTHORIZED SIGNATURE ________________________________________________________________________________ PRINTED NAME ________________________________________________________________________________ TITLE Date:_______________________ -9- SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 1, 3 AND 4 HEREIN) To be completed only if certificates for Old Class G Certificates in a principal amount not tendered are to be issued in the name of, or the New Class G Certificates issued pursuant to the Exchange Offer are to be issued to the order of, someone other than the person or persons whose signature(s) appears(s) within this Letter of Transmittal or issued to an address different from that shown in the box entitled "Description of Old Class G Certificates" within this Letter of Transmittal, or if Old Class G Certificates tendered by book-entry transfer that are not accepted for exchange are to be credited to an account maintained at DTC. NAME: __________________________________________________________________________ ADDRESS: _______________________________________________________________________ (PLEASE PRINT) ________________________________________________________________________________ ________________________________________________________________________________ (INCLUDING ZIP CODE) ________________________________________________________________________________ TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER (SEE SUBSTITUTE FORM W-9 HEREIN) -10- SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 3 AND 4 HEREIN) To be completed only if certificates for Old Class G Certificates in a principal amount not tendered or not accepted for exchange or the New Class G Certificates issued pursuant to the Exchange Offer are to be sent to someone other than the person or person(s) whose signature(s) appear(s) within this Letter of Transmittal or issued to an address different from that shown in the box entitled "Description of Old Class G Certificates" within this Letter of Transmittal. NAME: __________________________________________________________________________ ADDRESS: _______________________________________________________________________ (PLEASE PRINT) ________________________________________________________________________________ ________________________________________________________________________________ (INCLUDING ZIP CODE) ________________________________________________________________________________ TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER (SEE SUBSTITUTE FORM W-9 HEREIN) -11- INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. Delivery of this Letter of Transmittal and Old Class G Certificates; Guaranteed Delivery Procedures. The certificates for the tendered Old Class G Certificates (or a confirmation of a book-entry transfer into the Exchange Agent's account at DTC of all Old Class G Certificates delivered electronically), as well as a properly completed and duly executed copy of this Letter of Transmittal or facsimile hereof, or an Agent's Message in lieu of this Letter of Transmittal, and any other documents required by this Letter of Transmittal must be received by the Exchange Agent at its address set forth herein prior to 5:00 P.M., New York City time, on the Expiration Date. The method of delivery of the tendered Old Class G Certificates, this Letter of Transmittal and all other required documents to the Exchange Agent is at the election and risk of the Holder and, except as otherwise provided below, the delivery will be deemed made only when actually received by the Exchange Agent. Instead of delivery by mail, it is recommended that the Holder use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure timely delivery. No Letter of Transmittal or Old Class G Certificates should be sent to the Company. Holders who wish to tender their Old Class G Certificates and (i) whose Old Class G Certificates are not immediately available, or (ii) who cannot deliver their Old Class G Certificates, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date, or (iii) who cannot complete the procedure for book-entry transfer prior to the Expiration Date, must tender their Old Class G Certificates and follow the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedures (i) such tender must be made by or through an Eligible Institution; (ii) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder of the Old Class G Certificates, the certificate number or numbers of such Old Class G Certificates and the principal amount of Old Class G Certificates tendered, stating that the tender is being made thereby and guaranteeing that, within five business days after the Expiration Date, this Letter of Transmittal (or facsimile hereof), or an Agent's Message in lieu of this Letter of Transmittal, together with the certificate(s) representing the Old Class G Certificates (or a confirmation of book-entry delivery into the Exchange Agent's account at DTC) and any of the required documents will be deposited by the Eligible Institution with the Exchange Agent; and (iii) such properly completed and executed Letter of Transmittal (or facsimile hereof), or an Agent's Confirmation in lieu of this Letter of Transmittal, as well as all other documents required by this Letter of Transmittal and the certificate(s) representing all tendered Old Class G Certificates in proper form for transfer (or a confirmation of book-entry delivery into the Exchange Agent's account at DTC), must be received by the Exchange Agent within five business days after the Expiration Date, all as provided in the Prospectus under the caption "The Exchange Offer--Guaranteed Delivery Procedures". Any Holder of Old Class G Certificates who wishes to tender his Old Class G Certificates pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 P.M., New York City time, on the Expiration Date. -12- All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Old Class G Certificates will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Old Class G Certificates not properly tendered or any Old Class G Certificates the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any irregularities or conditions of tender as to particular Old Class G Certificates. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Class G Certificates must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Old Class G Certificates, nor shall any of them incur any liability for failure to give such notification. Tenders of Old Class G Certificates will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Class G Certificates received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned without cost by the Exchange Agent to the tendering Holder of such Old Class G Certificates (or in the case of Old Class G Certificates tendered by the book-entry transfer procedures, such Old Class G Certificates will be credited to an account maintained with DTC), unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date. 2. Partial Tenders. Tenders of Old Class G Certificates will be accepted in all denominations of $100,000 and integral multiples in excess thereof. If less than the entire principal amount of any Old Class G Certificates is tendered, the tendering Holder should fill in the principal amount tendered in the third column of the chart entitled "Description of Old Class G Certificates." The entire principal amount of Old Class G Certificates delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. If the entire principal amount of all Old Class G Certificates is not tendered, Old Class G Certificates for the principal amount of Old Class G Certificates not tendered and a certificate or certificates representing New Class G Certificates issued in exchange for any Old Class G Certificates accepted will be sent to the Holder at his or her registered address, unless a different address is provided in the appropriate box on this Letter of Transmittal or unless tender is made through DTC, promptly after the Old Class G Certificates are accepted for exchange. 3. Signatures on the Letter of Transmittal; Bond Powers and Endorsements; Guarantee of Signatures. If this Letter of Transmittal (or facsimile hereof) is signed by the registered Holder(s) of the Old Class G Certificates tendered hereby, the signature must correspond with the name(s) as written on the face of the Old Class G Certificates without alteration, enlargement or any change whatsoever. If this Letter of Transmittal (or facsimile hereof) is signed by the registered Holder(s) of Old Class G Certificates tendered and the certificate(s) for New Class G Certificates issued in exchange therefor is to be issued (or any untendered principal amount of Old Class G Certificates is to be reissued) to the registered Holder, such Holder need not and should not endorse any tendered Old Class G Certificate, nor provide a separate bond power. In any other case, such Holder must either properly endorse the Old Class G Certificates tendered or transmit -13- a properly completed separate bond power with this Letter of Transmittal, with the signatures on the endorsement or bond power guaranteed by an Eligible Institution. If this Letter of Transmittal (or facsimile hereof) is signed by a person other than the registered Holder(s) of any Old Class G Certificates listed, such Old Class G Certificates must be endorsed or accompanied by appropriate bond powers signed as the name of the registered Holder(s) appears on the Old Class G Certificates. If this Letter of Transmittal (or facsimile hereof) or any Old Class G Certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, or officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and, unless waived by the Company, evidence satisfactory to the Company of their authority so to act must be submitted with this Letter of Transmittal. Endorsements on Old Class G Certificates or signatures on bond powers required by this Instruction 3 must be guaranteed by an Eligible Institution. Signatures on this Letter of Transmittal (or facsimile hereof), or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" with the meaning of Rule 17Ad-15 under the Exchange Act (each of the foregoing being referred to as an "Eligible Institution"), unless the Old Class G Certificates tendered pursuant thereto are tendered (i) by a registered Holder (including any participant in DTC whose name appears on a security position listing as the owner of Old Class G Certificates) who has not completed the form set forth herein entitled "Special Issuance Instructions" or the form entitled "Special Delivery Instructions" or (ii) for the account of an Eligible Institution. 4. Special Issuance and Delivery Instructions. Tendering Holders should indicate, in the applicable spaces, the name and address to which New Class G Certificates or substitute Old Class G Certificates for principal amounts not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal (or in the case of tender of the Old Class G Certificates through DTC, if different from DTC). In the case of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated. 5. Transfer Taxes. The Company will pay all transfer taxes, if any, applicable to the exchange of Old Class G Certificates pursuant to the Exchange Offer. If, however, certificates representing New Class G Certificates or Old Class G Certificates for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered Holder of the Old Class G Certificates tendered hereby, or if tendered Old Class G Certificates are registered in the name of any person other than the person signing this Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Old Class G Certificates pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or any other person) will be payable by the tendering Holder. If satisfactory evidence of -14- payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering Holder Except as provided in this Instruction 5, it will not be necessary for transfer tax stamps to be affixed to the Old Class G Certificates listed in this Letter of Transmittal. 6. Waiver of Conditions. The Company reserves the absolute right to amend, waive or modify specified conditions in the Exchange Offer in the case of any Old Class G Certificates tendered. 7. Mutilated, Lost, Stolen or Destroyed Old Class G Certificates. Any tendering Holder whose Old Class G Certificates have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated herein for further instruction. 8. Requests for Assistance or Additional Copies. Questions and requests for assistance and requests for additional copies of the Prospectus or this Letter of Transmittal my be directed to the Exchange Agent at the address specified in the Prospectus. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer. 9. Withdrawal. Tenders may be withdrawn only pursuant to the limited withdrawal rights set forth in the Prospectus under the caption "The Exchange Offer--Withdrawal of Tenders". (DO NOT WRITE IN SPACE BELOW)
CERTIFICATE SURRENDERED OLD CLASS G CERTIFICATES OLD CLASS G CERTIFICATE TENDERED ACCEPTED - --------------------------- --------------------------- --------------------------- ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ Delivery Prepared By Checked By Date ___________________________ ___________________________ ___________________________
-15- IMPORTANT TAX INFORMATION Under federal income tax laws, a Holder whose tendered Old Class G Certificates are accepted for exchange is required to provide the Exchange Agent (as payer) with such Holder's correct TIN on Substitute Form W-9 below or otherwise establish a basis for exemption from backup withholding. If such Holder is an individual, then his TIN is his social security number. If the Exchange Agent is not provided with the correct TIN or an adequate basis for an exemption, a $50 penalty may be imposed by the Internal Revenue Service, and payments made with respect to New Class G Certificates exchanged pursuant to the Exchange Offer may be subject to backup withholding. Certain Holders (including, among others, all corporations and certain foreign persons) are not subject to these backup withholding and reporting requirements. Exempt Holders should indicate their exempt status on Substitute Form W-9. A foreign person may qualify as an exempt recipient by submitting to the Exchange Agent a properly completed appropriate Internal Revenue Service Form W-8 (or Form W-8BEN, Form W-8ECI or Form W-8IMY or Form W-8EXP) signed under penalties of perjury, attesting to that Holder's exempt status. Form W-8BEN, Form W-8ECI, Form W-8EXP, or Form W-8IMY can be obtained from the Exchange Agent. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions. If backup withholding applies, the Exchange Agent is currently required to withhold 28% of any payments made to the Holder or other payee. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. Purpose of Substitute Form W-9 To prevent backup withholding on payments made with respect to the Exchange Offer, the Holder is required to provide the Exchange Agent with either: (i) the Holder's correct TIN by completing the form below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such Holder is awaiting a TIN) and that (A) the Holder has not been notified by the Internal Revenue Service that the Holder is subject to backup withholding as a result of failure to report all interest or dividends or (B) the Internal Revenue Service has notified the Holder that the Holder is no longer subject to backup withholding; or (ii) an adequate basis for exemption. What Number to Give the Exchange Agent The Holder is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the registered Holder of the Old Class G Certificates. If the Old Class G Certificates are held in more than one name or are not held in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. -16- SUBSTITUTE NUMBER FORM W-9 PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION - -------------------------------------------------------------------------------- NAME: - -------------------------------------------------------------------------------- ADDRESS: - -------------------------------------------------------------------------------- PART 1 - Please Provide Your TIN in the Box Social Security Number or at the Right and Certify by Employer Identification Number: Signing and Dating Below - -------------------------------------------------------------------------------- PART 2 - Certification Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), (2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends, or the IRS has notified me that I am no longer subject to backup withholding and (3) I am a U.S. person (including a U.S. resident alien). - -------------------------------------------------------------------------------- CERTIFICATION INSTRUCTIONS. You must cross out item (2) in Part 2 above it you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2). - -------------------------------------------------------------------------------- PART 3 - Check Box to the Right if Awaiting Tax Identification Number [ ] - -------------------------------------------------------------------------------- SIGN HERE: SIGNATURE: _________________ DATE: _____________________ - -------------------------------------------------------------------------------- NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING CURRENTLY AT A RATE OF 28% OF ANY PAYMENTS MADE TO HOLDERS OF NEW CLASS G CERTIFICATES PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THIS SUBSTITUTE FORM W-9. -17- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within 60 days, 28 percent of all reportable payments made to me thereafter will be withheld until I provide a number. Signature ____________________________ Date _____________________________ -18- The Exchange Agent: U.S. BANK TRUST NATIONAL ASSOCIATION c/o U.S. Bank Trust Corporate Trust Services 180 East Fifth Street St. Paul, MN 55101 Attention: Specialized Finance By Facsimile: (651) 244-1537 Confirm by Telephone: (800) 934-1537 -19- EX-99.2 23 g83137exv99w2.txt FORM OF NOTICE OF GUARANTEED DELIVERY EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY FOR PASS THROUGH CERTIFICATES, SERIES 2003-1G OF DELTA AIR LINES, INC. As set forth in the prospectus, dated , 2003 (the "Prospectus"), of Delta Air Lines, Inc. (the "Company") and in the accompanying Letter of Transmittal and instructions thereto (the "Letter of Transmittal"), this form or one substantially equivalent hereto must be used to accept the Company's offer to exchange (the "Exchange Offer") registered Pass Through Certificates, Series 2003-1G (the "New Class G Certificates") for any and all of its outstanding Pass Through Certificates, Series 2003-1G (the "Old Class G Certificates"), if (i) certificates representing such Old Class G Certificates to be tendered for exchange are not immediately available, or (ii) certificates representing such Old Class G Certificates, the Letter of Transmittal, or any other documents cannot be delivered to the Exchange Agent prior to the Expiration Date, or (iii) the procedures for book-entry transfer cannot be completed prior to the Expiration Date. This form may be delivered by mail or hand delivery or transmitted via facsimile to the Exchange Agent as set forth below. All capitalized terms used but not defined herein shall have the meanings given to them in the Prospectus, unless the context otherwise indicates. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2003, UNLESS THE EXCHANGE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD CLASS G CERTIFICATES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE EXPIRATION DATE. The Exchange Agent: U.S. BANK TRUST NATIONAL ASSOCIATION c/o U.S. Bank Corporate Trust Services 180 East Fifth Street St. Paul, MN 55101 Attention: Specialized Finance By Facsimile: (651) 244-1537 Confirm by Telephone: (800) 934-6802 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on the Letter of Transmittal is required to be guaranteed under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tender(s) to the Company, upon the terms and subject to the conditions set forth in the Exchange Offer and the Letter of Transmittal, receipt of which is hereby acknowledged, the aggregate principal amount of Old Class G Certificates set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed Delivery Procedures." The undersigned understands that tenders of Old Class G Certificates will be accepted only in principal amounts equal to $100,000 or integral multiples thereof. The undersigned understands that tenders of Old Class G Certificates pursuant to the Exchange Offer may not be withdrawn after 5:00 p.m., New York time, on the Expiration Date. Tenders of Old Class G Certificates may also be withdrawn if the Exchange Offer is terminated without any such Old Class G Certificates being exchanged thereunder or as otherwise provided in the Prospectus under the caption "The Exchange Offer--Withdrawal of Tenders." All authority herein conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall survive the death or incapacity of the undersigned, and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned. PLEASE SIGN AND COMPLETE Signature(s) of Registered Owner(s) or Name(s) of Registered Holder(s): Authorized Signatory: ______________________________________ __________________________________ ______________________________________ __________________________________ ______________________________________ __________________________________ Principal Amount of Old Class G Address: Certificates Tendered: ______________________________________ __________________________________ __________________________________ __________________________________ Certificate No(s). of Old Class G Area Code and Telephone No.: _____ Certificates (if available): ______________________________________ If Old Class G Certificates will be delivered by book-entry ______________________________________ transfer at The Depository Trust Company, insert Depository Account No.: __________________________________ Date: ________________________________ -2- This Notice of Guaranteed Delivery must be signed by the registered holder(s) of Old Class G Certificates exactly as its (their) name(s) appear(s) on the certificate(s) for Old Class G Certificates or on a security position listing as the owner of Old Class G Certificates, or by person(s) authorized to become registered holder(s) by endorsements and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must provide the following information. PLEASE PRINT NAME(S) AND ADDRESS(ES): Name (s): ____________________________________________________________________ ____________________________________________________________________ Capacity: ____________________________________________________________________ Address(es):___________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ DO NOT SEND OLD CLASS G CERTIFICATES WITH THIS FORM. OLD CLASS G CERTIFICATES SHOULD BE SENT TO THE EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL. -3- The undersigned, a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or a correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, hereby (a) represents that each holder of Old Class G Certificates on whose behalf this tender is being made "own(s)" the Old Class G Certificates covered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended, (b) represents that such tender of Old Class G Certificates complies with Rule 14e-4, and (c) guarantees that, within five business days from the date of this Notice of Guaranteed Delivery, a properly completed and duly executed Letter of Transmittal or a facsimile thereof, or an Agent's Message (as defined in "The Exchange Offer--Book-Entry Transfer" in the Prospectus) in lieu of the Letter of Transmittal, together with certificates representing the Old Class G Certificates covered hereby in proper form for the transfer (or confirmation of the book-entry transfer of such Old Class G Certificates into the Exchange Agent's account at The Depository Trust Company, pursuant to the procedure for book-entry transfer set forth in the Prospectus) and required documents will be deposited by the undersigned with the Exchange Agent. The undersigned acknowledges that it must deliver the Letter of Transmittal, or an Agent's Message in lieu of the Letter of Transmittal, and Old Class G Certificates tendered hereby to the Exchange Agent within the time period set forth above and that failure to do so could result in financial loss to the undersigned. Name of Firm: ___________________________ __________________________________ AUTHORIZED SIGNATURE Address: ________________________________ Name: ____________________________ ________________________________ Title: ___________________________ Area Code and Telephone No.: ____________ Date: ____________________________ -4- EX-99.3 24 g83137exv99w3.txt FORM OF LETTER TO BROKERS EXHIBIT 99.3 OFFER TO EXCHANGE PASS THROUGH CERTIFICATES, SERIES 2003-1G, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OUTSTANDING PASS THROUGH CERTIFICATES, SERIES 2003-1G, OF DELTA AIR LINES, INC. , 2003 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We are enclosing herewith an offer by Delta Air Lines, Inc. (the "Company") to exchange (the "Exchange Offer") registered Pass Through Certificates, Series 2003-1G (the "New Class G Certificates") for any and all of its outstanding Pass Through Certificates, Series 2003-1G (the "Old Class G Certificates"), upon the terms and subject to the conditions set forth in the accompanying prospectus, dated , 2003 (the "Prospectus"), and related Letter of Transmittal and instructions thereto (the "Letter of Transmittal"). A Letter of Transmittal is being circulated to holders of Old Class G Certificates with the Prospectus. Holders may use it to effect valid tenders of Old Class G Certificates. The Exchange Offer also provides a procedure for holders to tender the Old Class G Certificates by means of guaranteed delivery. Based on interpretations of the staff of the Securities and Exchange Commission (the "Commission") set forth in no-action letters issued to third parties, New Class G Certificates issued pursuant to the Exchange Offer in exchange for Old Class G Certificates may be offered for resale, resold or otherwise transferred by holders thereof (other than (i) a broker-dealer who purchased such Old Class G Certificates directly from the Trustee for its own account or (ii) a person that is an "affiliate", as defined in Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"), of the Company or of any Trustee) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holder is acquiring such New Class G Certificates in its ordinary course of business and such holder has no arrangements or understanding with any person to participate in the distribution of the New Class G Certificates. Holders of Old Class G Certificates wishing to accept the Exchange Offer must represent to the Company that such conditions have been met. Each broker-dealer that receives New Class G Certificates for its own account, in exchange for Old Class G Certificates that were acquired as a result of market making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such New Class G Certificates. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, such broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The Prospectus, as it may be amended or supplemented from time to time, may be used by such broker-dealer in connection with the resales of New Class G Certificates received in exchange for Old Class G Certificates. The Company has agreed that, for a period of 90 days after the date of the Prospectus, it will make the Prospectus and any amendment or supplement thereto available to any broker-dealer for use in connection with any such resale. Notwithstanding any other term of the Exchange Offer, the Company may terminate or amend the Exchange Offer as provided in the Prospectus and will not be required to accept for exchange, or exchange New Class G Certificates for, any Old Class G Certificates not accepted for exchange prior to such termination. THE COMPANY RESERVES THE ABSOLUTE RIGHT TO REJECT ANY AND ALL OLD CLASS G CERTIFICATES NOT PROPERLY TENDERED OR ANY OLD CLASS G CERTIFICATES THE COMPANY'S ACCEPTANCE OF WHICH WOULD, IN THE OPINION OF COUNSEL TO THE COMPANY, BE UNLAWFUL. We are asking you to contact your clients for whom you hold Old Class G Certificates registered in your name or in the name of your nominee. In addition, we ask you to contact your clients who, to your knowledge, hold Old Class G Certificates registered in their own names. The Company will not pay any fees or commissions to any broker, dealer or other person (other than the Exchange Agent as described in the Prospectus) in connection with the solicitation of tenders of Old Class G Certificates pursuant to the Exchange Offer. You will, however, be reimbursed by the Company for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. The Company will pay any transfer taxes applicable to the tender of Old Class G Certificates to it or its order, except as otherwise provided in the Prospectus or the Letter of Transmittal. Enclosed is a copy of each of the following documents: 1. The Prospectus. 2. A Letter of Transmittal for your use in connection with the Exchange Offer and for the information of your clients. 3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer if certificates for Old Class G Certificates are not immediately available or time will not permit all required documents to reach the Exchange Agent prior to the Expiration Date (as defined below) or if the procedure for book-entry transfer cannot be completed on a timely basis. 4. A form of letter that may be sent to your clients for whose accounts you hold Old Class G Certificates registered in your name or the name of your nominee, with space provided for obtaining the clients' instructions with regard to the Exchange Offer. Your prompt action is requested. The Exchange Offer will expire at 5:00 P.M., New York City time, on , 2003, unless extended by the Company (the "Expiration Date"). Old Class G Certificates tendered pursuant to the Exchange Offer may be withdrawn, subject to the procedures described in the Prospectus, at any time prior to 5:00 P.M., New York City time, on the Expiration Date. THE EXCHANGE OFFER IS NOT CONDITIONED ON ANY MINIMUM PRINCIPAL AMOUNT OF OLD CLASS G CERTIFICATES BEING TENDERED. -2- To tender Old Class G Certificates in the Exchange Offer, certificates for Old Class G Certificates (or confirmation of a book-entry transfer into the Exchange Agent's account at The Depository Trust Company of Old Class G Certificates tendered electronically) and a duly executed and properly completed Letter of Transmittal or facsimile thereof, or an Agent's Message (as defined in "The Exchange Offer--Book-Entry Transfer" in the Prospectus) in lieu thereof , together with any other required documents, must be received by the Exchange Agent as indicated in the Prospectus. If holders desire to tender Old Class G Certificates pursuant to the Exchange Offer and (i) certificates representing such Old Class G Certificates are not immediately available, or (ii) certificates evidencing such Old Class G Certificates or any other required documents cannot be delivered to the Exchange Agent prior to the Expiration Date, or (iii) the procedures for book-entry transfer cannot be completed prior to the Expiration Date, such holders may effect a tender of such Old Class G Certificates in accordance with the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed Delivery Procedures." Holders following the guaranteed delivery procedure must still fully complete, execute and deliver the Letter of Transmittal or facsimile thereof. The Exchange Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Old Class G Certificates in any jurisdiction in which the making of the Exchange Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction or would otherwise not be in compliance with any provision of any applicable law. Additional copies of the enclosed material may be obtained from the Exchange Agent by calling (800) 934-6802. NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF THE COMPANY, THE TRUSTEE OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER OR THE SOLICITATION, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL. Very truly yours, Delta Air Lines, Inc. -3- EX-99.4 25 g83137exv99w4.txt FORM OF LETTER TO CLIENTS EXHIBIT 99.4 OFFER TO EXCHANGE PASS THROUGH CERTIFICATES, SERIES 2003-1G, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OUTSTANDING PASS THROUGH CERTIFICATES, SERIES 2003-1G, OF DELTA AIR LINES, INC. To Our Clients: Enclosed for your consideration are the prospectus, dated ,2003 (the "Prospectus"), of Delta Air Lines, Inc. (the "Company") and the related Letter of Transmittal and instructions thereto (the "Letter of Transmittal") in connection with the Company's offer to exchange (the "Exchange Offer") registered Pass Through Certificates, Series 2003-1G (the "New Class G Certificates") for any and all of its outstanding Pass Through Certificates, Series 2003-1G (the "Old Class G Certificates"), upon the terms and subject to the conditions set forth in the Prospectus and Letter of Transmittal. We are the registered holder (the "Registered Holder") of Old Class G Certificates held for your account. An exchange of the Old Class G Certificates can be made only by us as the Registered Holder and pursuant to your instructions. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO EXCHANGE THE OLD CLASS G CERTIFICATES HELD BY US FOR YOUR ACCOUNT. The Prospectus and related Letter of Transmittal provide a procedure for holders to tender their Old Class G Certificates by means of guaranteed delivery. We request information as to whether you wish to exchange any or all of the Old Class G Certificates held by us for your account upon the terms and subject to the conditions of the Exchange Offer. Your attention is directed to the following: 1. New Class G Certificates will be issued in exchange for Old Class G Certificates at the rate of $1,000 principal amount of New Class G Certificates for each $1,000 principal amount of Old Class G Certificates. The New Class G Certificates will make distributions from April 26, 2003. Holders of Old Class G Certificates whose Old Class G Certificates are accepted for exchange will be deemed to have waived the right to receive any payment of distributions on the Old Class G Certificates accrued from April 26, 2003 to the date of issuance of the New Class G Certificates. The form and terms of the New Class G Certificates are identical in all material respects to the form and terms of the Old Class G Certificates, except that the New Class G Certificates have been registered under the Securities Act of 1933, as amended (the "Securities Act"), and will not contain restrictions on transfer or provisions relating to interest rate increases, and the New Class G Certificates will be available only in book-entry form. 2. Based on interpretations of the staff of the Securities and Exchange Commission (the "Commission") set forth in no-action letters to third parties, New Class G Certificates issued pursuant to the Exchange Offer in exchange for Old Class G Certificates may be offered for resale, resold or otherwise transferred by holders thereof (other than (i) a broker-dealer who purchased Old Class G Certificates directly from the Trustee for its own account or (ii) a person that is an "affiliate", as defined in Rule 405 under the Securities Act, of the Company or of any Trustee) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holder is acquiring such New Class G Certificates in its ordinary course of business and such holder has no arrangements or understanding with any person to participate in the distribution of the New Class G Certificates. Holders of Old Class G Certificates wishing to accept the Exchange Offer must represent to the Company that such conditions have been met. 3. THE EXCHANGE OFFER IS NOT CONDITIONED ON ANY MINIMUM PRINCIPAL AMOUNT OF OLD CLASS G CERTIFICATES BEING TENDERED. 4. Notwithstanding any other term of the Exchange Offer, the Company may terminate or amend the Exchange Offer as provided in the Prospectus and will not be required to accept for exchange, or exchange New Class G Certificates for, any Old Class G Certificates not accepted for exchange prior to such termination. 5. The Exchange Offer will expire at 5:00 P.M., New York City time, on , 2003, unless extended by the Company (the "Expiration Date"). Tendered Old Class G Certificates may be withdrawn, subject to the procedures described in the Prospectus, at any time prior to 5:00 P.M., New York City time, on the Expiration Date. 6. Any transfer taxes applicable to the exchange of the Old Class G Certificates pursuant to the Exchange Offer will be paid by the Company, except as otherwise provided in Instruction 5 of the Letter of Transmittal. If you wish to have us tender any or all of your Old Class G Certificates, please so instruct us by completing, detaching and returning to us the instruction form attached hereto. An envelope to return your instructions is enclosed. If you authorize a tender of your Old Class G Certificates, the entire principal amount of Old Class G Certificates held for your account will be tendered unless otherwise specified on the instruction form. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf by the Expiration Date. THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF THE OLD CLASS G CERTIFICATES IN ANY JURISDICTION IN WHICH THE MAKING OF THE EXCHANGE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION OR WOULD OTHERWISE NOT BE IN COMPLIANCE WITH ANY PROVISION OF ANY APPLICABLE LAW. -2- OFFER TO EXCHANGE PASS THROUGH CERTIFICATES, SERIES 2003-1G, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OUTSTANDING PASS THROUGH CERTIFICATES, SERIES 2003-1G, OF DELTA AIR LINES, INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Prospectus and the related Letter of Transmittal, in connection with the offer by the Company to exchange the Old Class G Certificates for New Class G Certificates. This will instruct you to tender the principal amount of Old Class G Certificates indicated below held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, and the undersigned hereby makes the applicable representations set forth in such Letter of Transmittal. SIGN HERE __________________________________ SIGNATURE __________________________________ SIGNATURE [ ] Tender all of the Old Class G Certificates [ ] Tender $ _____________ Principal Amount of Old Class G Certificates ___________________________________________ NAME(S) (PLEASE PRINT) ___________________________________________ ADDRESS ___________________________________________ ZIP CODE ___________________________________________ AREA CODE AND TELEPHONE NUMBER Dated:_____________________________________ * Unless otherwise indicated, it will be assumed that all of the securities listed are to be tendered. -3- EX-99.5 26 g83137exv99w5.txt SCHEDULE I EXHIBIT 99.5 SCHEDULE I Part A The following documents relating to one Boeing 737-832 aircraft bearing United States registration number N3760C (hereinafter collectively referred to as the "N3760C Documents") have been provided in this filing: (a) Participation Agreement (N3760C), dated as of January 30, 2003, by and among Delta Air Lines, Inc. (the "Company"), U.S. Bank Trust National Association, as Pass Through Trustee under each of the Pass Through Trust Agreements (the "Pass Through Trustee"), U.S. Bank Trust National Association, as Subordination Agent under the Intercreditor Agreement (the "Subordination Agent"), U.S. Bank Trust National Association, as loan trustee (the "Loan Trustee"), and U.S. Bank Trust National Association, in its individual capacity as set forth therein ("US Bank"); and (b) Indenture and Security Agreement (N3760C), dated as of January 30, 2003, by and between the Company and the Loan Trustee. The corresponding documents listed below are substantially identical in all material respects to the N3760C Documents, with the following exceptions: (1) conforming changes have been made to reflect the appropriate United States registration number of each aircraft (i.e., N3761R, N193DN, N194DN, etc.), the appropriate model of each aircraft (i.e., 737-832, 767-332ER) and the appropriate manufacturer's serial number of each aircraft; (2) the description and original principal amount of the equipment notes set forth on Schedule I to each Participation Agreement differ; (2) the dollar amount set forth on Exhibit C to each Indenture and Security Agreement differs according to the model of each aircraft; (3) conforming changes have been made to reflect the appropriate engines relating to each aircraft (i.e., CFM International, Inc. CFM56-7B26, United Technologies Corporation PW4060, General Electric Company CF6-80C2B6F); and (4) the definitions set forth in Annex A to each Participation Agreement and Indenture and Security Agreement differ. (1)(a) Participation Agreement (N3761R), dated as of January 30, 2003, by and among the Company, the Pass Through Trustee, the Subordination Agent and U.S. Bank Trust National Association, as loan trustee, and US Bank. (1)(b) Indenture and Security Agreement (N3761R), dated as of January 30, 2003, by and between the Company and the Loan Trustee. (2)(a) Participation Agreement (N193DN), dated as of January 30, 2003, by and among the Company, the Pass Through Trustee, the Subordination Agent and U.S. Bank Trust National Association, as loan trustee, and US Bank. (2)(b) Indenture and Security Agreement (N193DN), dated as of January 30, 2003, by and between the Company and the Loan Trustee. (3)(a) Participation Agreement (N194DN), dated as of January 30, 2003, by and among the Company, the Pass Through Trustee, the Subordination Agent and U.S. Bank Trust National Association, as loan trustee, and US Bank. (3)(b) Indenture and Security Agreement (N194DN), dated as of January 30, 2003, by and between the Company and the Loan Trustee. (4)(a) Participation Agreement (N1611B), dated as of January 30, 2003, by and among the Company, the Pass Through Trustee, the Subordination Agent and U.S. Bank Trust National Association, as loan trustee, and US Bank. (4)(b) Indenture and Security Agreement (N1611B), dated as of January 30, 2003, by and between the Company and the Loan Trustee. (5)(a) Participation Agreement (N178DZ), dated as of January 30, 2003, by and among the Company, the Pass Through Trustee, the Subordination Agent and U.S. Bank Trust National Association, as loan trustee, and US Bank. (5)(b) Indenture and Security Agreement (N178DZ), dated as of January 30, 2003, by and between the Company and the Loan Trustee. Part B The following documents relating to one Boeing 767-332ER aircraft bearing United States registration number N195DN (hereinafter collectively referred to as the "N195DN Documents") have been provided in this filing: (a) Participation Agreement (N195DN), dated as of January 30, 2003, by and among Delta Air Lines, Inc. (the "Company"), U.S. Bank Trust National Association, as Pass Through Trustee under each of the Pass Through Trust Agreements (the "Pass Through Trustee"), U.S. Bank Trust National Association, as Subordination Agent under the Intercreditor Agreement (the "Subordination Agent"), U.S. Bank Trust National Association, as loan trustee (the "Loan Trustee"), and U.S. Bank Trust National Association, in its individual capacity as set forth therein ("US Bank"); and (b) Indenture and Security Agreement (N195DN), dated as of January 30, 2003, by and between the Company and the Loan Trustee. The corresponding documents listed below are substantially identical in all material respects to the N195DN Documents, with the following exceptions: (1) conforming changes have been made to reflect the appropriate United States registration number of each aircraft (i.e., N196DN, N197DN, N198DN, etc.), the appropriate model of each aircraft (i.e., 737-832, 767-332ER) and the appropriate manufacturer's serial number of each aircraft; (2) the description and original principal amount of the equipment notes set forth on Schedule I to each Participation Agreement differ; (2) the dollar amount set forth on Exhibit C to each Indenture and Security Agreement differs according to the model of each aircraft; (3) conforming changes have been made to reflect the appropriate engines relating to each aircraft (i.e., CFM International, Inc. CFM56-7B26, United Technologies Corporation PW4060, General Electric Company CF6-80C2B6F); and (4) the definitions set forth in Annex A to each Participation Agreement and Indenture and Security Agreement differ. -2- (1)(a) Participation Agreement (N196DN), dated as of January 30, 2003, by and among the Company, the Pass Through Trustee, the Subordination Agent and U.S. Bank Trust National Association, as loan trustee, and US Bank. (1)(b) Indenture and Security Agreement (N196DN), dated as of January 30, 2003, by and between the Company and the Loan Trustee. (2)(a) Participation Agreement (N197DN), dated as of January 30, 2003, by and among the Company, the Pass Through Trustee, the Subordination Agent and U.S. Bank Trust National Association, as loan trustee, and US Bank. (2)(b) Indenture and Security Agreement (N197DN), dated as of January 30, 2003, by and between the Company and the Loan Trustee. (3)(a) Participation Agreement (N198DN), dated as of January 30, 2003, by and among the Company, the Pass Through Trustee, the Subordination Agent and U.S. Bank Trust National Association, as loan trustee, and US Bank. (3)(b) Indenture and Security Agreement (N198DN), dated as of January 30, 2003, by and between the Company and the Loan Trustee. (4)(a) Participation Agreement (N1612T), dated as of January 30, 2003, by and among the Company, the Pass Through Trustee, the Subordination Agent and U.S. Bank Trust National Association, as loan trustee, and US Bank. (4)(b) Indenture and Security Agreement (N1612T), dated as of January 30, 2003, by and between the Company and the Loan Trustee. (5)(a) Participation Agreement (N1613B), dated as of January 30, 2003, by and among the Company, the Pass Through Trustee, the Subordination Agent and U.S. Bank Trust National Association, as loan trustee, and US Bank. (5)(b) Indenture and Security Agreement (N1613B), dated as of January 30, 2003, by and between the Company and the Loan Trustee. -3- -----END PRIVACY-ENHANCED MESSAGE-----